Restructuring

12 Months Ended

Dec. 31, 2019

Restructuring

Restructuring

9. Restructuring

The Company continually reviews its manufacturing footprint and operating cost structure and may decide to close operations or reduce headcount to gain efficiencies, integrate acquired operations, reduce future expenses and address other market factors. The Company incurs costs associated with these actions including employee severance and benefits, other exit costs such as those related to contract terminations, and asset impairment charges. The Company also may incur other costs related to closed facilities including environmental remediation, clean up, dismantling and preparation for sale or other disposition.

The Company accounts for restructuring and other costs under applicable provisions of generally accepted accounting principles. Charges for employee severance and related benefits are generally accrued based on contractual arrangements with employees or their representatives. Other exit costs are accrued based on the estimated cost to settle related contractual arrangements. Estimated environmental remediation costs are accrued when specific claims have been received or are probable of being received.

The Company’s decisions to curtail selected production capacity have resulted in write downs of certain long-lived assets to the extent their carrying amounts exceeded fair value or fair value less cost to sell. The Company classified the significant assumptions used to determine the fair value of the impaired assets in the period that the measurement was taken as Level 3 (third party appraisal) in the fair value hierarchy as set forth in the general accounting principles for fair value measurements. For the asset impairments recorded through December 31, 2019 and December 31, 2018, the remaining carrying value of the impaired assets was approximately $0 and $9 million, respectively.

When a decision is made to take restructuring actions, the Company manages and accounts for them programmatically apart from the on-going operations of the business. Information related to major programs are

presented separately while minor initiatives are presented on a combined basis. As of December 31, 2019 and 2018, no major restructuring programs were in effect.

In 2019, the Company implemented several discrete restructuring initiatives and recorded restructuring and other charges of $69 million.  These charges consisted of employee costs such as severance and benefit-related costs, write-down of assets and other exit costs primarily related to a severance program for certain salaried employees at the Company’s corporate and America’s headquarters and a furnace closure in the Americas.  These restructuring charges were discrete actions and are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred. These charges were recorded to Selling and administrative expense ($2 million) and Other expense, net ($67 million) on the Consolidated Results of Operations. The Company expects that the majority of the remaining cash expenditures related to the accrued employee costs will be paid out by the end of 2020.

Also, as part of previous restructuring charges, the Company has reserved for estimated increases in workers compensation claims that arise from plant and furnace closures. Since many of these reserves are long-term in nature, the Company has transferred approximately $14 million of these reserves to a long-term liability account in the fourth quarter of 2019.

In 2018, the Company implemented several discrete restructuring initiatives and recorded restructuring, asset impairment and other charges of $92 million. These charges consisted of employee costs, write-down of assets, and other exit costs primarily related to plant and furnace closures in the Americas region. These restructuring charges were discrete actions and are expected to approximate the total cumulative costs for those actions as no significant additional costs are expected to be incurred. These restructuring charges primarily relate to capacity curtailments and the Company reallocated the products produced at these facilities to other facilities. These charges were recorded to Cost of goods sold ($5 million) and Other expense, net ($87 million) on the Consolidated Results of Operations.

The following table presents information related to restructuring, asset impairment and other costs related to closed facilities from January 1, 2018 through December 31, 2019:

	Employee		Asset		Other		Total
	Costs		Impairment		Exit Costs		Restructuring
Balance at January 1, 2018	$	54	$		$	31	$	85
Charges		20		60		12		92
Write-down of assets to net realizable value				(60)				(60)
Net cash paid, principally severance and related benefits		(24)				(8)		(32)
Transfers to other accounts						(4)		(4)
Other, including foreign exchange translation		(3)				(9)		(12)
Balance at December 31, 2018	$	47	$	—	$	22	$	69
Charges		39		17		13		69
Write-down of assets to net realizable value				(17)				(17)
Net cash paid, principally severance and related benefits		(37)				(17)		(54)
Transfers to other accounts		(14)						(14)
Other, including foreign exchange translation		(3)				(5)		(8)
Balance at December 31, 2019	$	32	$	—	$	13	$	45