Restructuring and Related Activities

9 Months Ended

Sep. 30, 2020

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure

RESTRUCTURING AND ASSET RELATED CHARGES - NET

2020 Restructuring Program

On September 30, 2020, the Corporation's Board of Directors (the "Board") approved restructuring actions that were aligned to the structural cost improvement initiatives announced by Dow Inc. in response to the continued economic impact from the pandemic caused by coronavirus disease 2019 ("COVID-19"). The restructuring program is designed to reduce structural costs and enable the Corporation to further enhance competitiveness while the COVID-19 economic recovery gains traction. This program includes workforce cost reductions and actions to rationalize the Corporation's manufacturing assets ("2020 Restructuring Program"). These actions are expected to be substantially complete by the end of 2021.

As a result of these actions, in the third quarter of 2020, the Corporation recorded pretax restructuring charges of $13 million, consisting of severance and related benefit costs of $9 million and asset write-downs and write-offs of $4 million. The impact of these charges was included in "Restructuring and asset related charges - net" in the consolidated statements of income.

At September 30, 2020, $7 million was included in "Accrued and other current liabilities" and $2 million was included in "Other noncurrent obligations" in the consolidated balance sheets.

DowDuPont Cost Synergy Program

In September and November 2017, the Corporation approved restructuring actions that were aligned with DowDuPont’s cost synergy targets. As this restructuring program has ended, the Corporation had no restructuring charges related to this program in the third quarter of 2020, compared with restructuring charges for severance and related benefit costs of $2 million in the third quarter of 2019. For the nine months ended September 30, 2020, the Corporation recorded restructuring charges related to this program of $2 million for severance and related benefit costs, compared with $4 million for the nine months ended September 30, 2019.

The Corporation expects to incur additional costs in the future related to its restructuring activities. Future costs are expected to include demolition costs related to closed facilities and restructuring plan implementation costs; these costs will be recognized as incurred. The Corporation also expects to incur additional employee-related costs, including involuntary termination benefits, related to its other optimization activities. These costs cannot be reasonably estimated at this time.

2019 Asset Related Charges

On August 13, 2019, the Corporation entered into a definitive agreement to sell its acetone derivatives product line. The sale was completed in the fourth quarter of 2019 and included acetone derivatives related inventory and production assets, as well as site infrastructure, land and utilities located in Institute, West Virginia. The sale also included TDCC-owned railcars that were transferred to UCC in the fourth quarter of 2019 in anticipation of the sale. The assets, with the exception of inventory and railcars, were written down to zero in the third quarter of 2019, resulting in a pretax impairment charge of $75 million, which was included in "Restructuring and asset related charges - net" in the consolidated statements of income. The Corporation remains at the Institute, West Virginia site as a tenant.

The Corporation evaluated the divestiture of the acetone derivatives product line and determined it did not represent a strategic shift that had a major effect on the Corporation’s operations and financial results and did not qualify as an individually significant component of the Corporation. As a result, the divestiture is not reported as discontinued operations.