Restructuring

9 Months Ended

Sep. 30, 2020

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

In the first quarter of 2020, the Company initiated a comprehensive plan to reduce existing structural costs. In the three and nine months ended September 30, 2020, the Company recognized restructuring expenses of $20 million and $72 million, respectively, associated with this plan.

Engine segment: During the three and nine months ended September 30, 2020, the Company recorded $15 million and $40 million, respectively, primarily related to severance costs, professional fees and a voluntary termination program. During the nine months ended September 30, 2020, the Company also recorded employee termination benefits of $3 million in the Engine segment, reflecting the statutory minimum benefits, related to the announced closure of a facility in Europe, affecting approximately 200 employees.

In 2019, the Company approved actions within the Engine segment to improve future profitability and competitiveness and address non-core product lines. The Company recorded restructuring expense of $3 million and $14 million, respectively, primarily related to professional fees and employee termination benefits, related to these actions. The Company also executed a voluntary termination program in 2019 in its Engine segment which resulted in expense of $10 million and $18 million during the three and nine months ended September 30, 2019, respectively.

Drivetrain segment: During the three and nine months ended September 30, 2020, the Company recorded $3 million and $8 million, respectively, primarily related to severance costs and professional fees. During the nine months ended September 30, 2020, the Company also recorded employee termination benefits of $19 million in the Drivetrain segment, reflecting the statutory minimum benefits, related to the announced closure of a facility in Europe, affecting approximately 350 employees.

The employee termination benefits related to the announced plant closures are subject to negotiation with labor unions, which could result in additional employee termination benefits. Future cash payments for these restructuring activities are expected to continue through 2022.

The Company also recorded restructuring expense of $3 million during the nine months ended September 30, 2019, related to Corporate restructuring activities.

Estimates of restructuring expense are based on information available at the time such charges are recorded. Due to the inherent uncertainty involved in estimating restructuring expenses, actual amounts paid for such activities may differ from amounts initially recorded. Accordingly, the Company may record revisions of previous estimates by adjusting previously established accruals.

The Company continues to evaluate different options across its operations and to reduce existing structural costs over the next few years. The Company will recognize restructuring expense associated with any future actions at the time they are approved and become probable or are incurred. Any future actions could result in significant restructuring expense.

The following tables display a rollforward of the severance accruals recorded within the Company's Condensed Consolidated Balance Sheets and the related cash flow activity for the three and nine months ended September 30, 2020 and 2019:

	Severance Accruals
(in millions)	Drivetrain		Engine		Total
Balance at December 31, 2019	$	4	$	30	$	34
Provision	1		11		12
Cash payments	—		(13)		(13)
Balance at March 31, 2020	$	5	$	28	$	33
Provision	17		11		28
Cash payments	(1)		(14)		(15)
Balance at June 30, 2020	$	21	$	25	$	46
Provision	1		9		10
Cash payments	(1)		(11)		(12)
Balance at September 30, 2020	$	21	$	23	$	44

	Severance Accruals
(in millions)	Drivetrain		Engine		Total
Balance at December 31, 2018	$	4	$	21	$	25
Provision	—		7		7
Cash payments	—		(20)		(20)
Balance at March 31, 2019	$	4	$	8	$	12
Provision	—		8		8
Cash payments	—		(2)		(2)
Balance at June 30, 2019	$	4	$	14	$	18
Provision	—		8		8
Cash payments	(1)		(7)		(8)
Balance at September 30, 2019	$	3	$	15	$	18