Restructuring Charges

3 Months Ended

Mar. 31, 2020

RESTRUCTURING CHARGES

We periodically take action to improve operating efficiencies, typically in connection with business acquisitions or changes in the economic environment. Our footprint and headcount reductions and organizational integration actions relate to discrete, unique restructuring events, primarily reflected in the following plans:

In 2018, we announced actions in EMEA to reduce fixed costs by $50 million. The initiatives primarily include headcount reductions throughout the EMEA region. Additionally, we exited domestic sales operations in Turkey. These actions are substantially complete at March 31, 2020.

On May 31, 2019, we announced our intention to reconvert our Naples, Italy manufacturing plant and potentially sell the plant to a third party. On September 16, 2019, we entered into a preliminary agreement to sell the plant to a third-party purchaser and to support costs associated with the transition. In October 2019, we announced that, based on further discussions with unions and the Italian government, we will continue production at the Naples manufacturing plant in the near-term and resume negotiations with unions and the Italian government related to our exit of the plant. Our preliminary agreement to sell the plant to a third-party purchaser terminated in accordance with its terms in March 2020. We intend to cease production in the plant and exit the facility in 2020 as previously disclosed.

In connection with this action, we have incurred approximately $43 million in asset impairment costs, $8 million in other associated costs and $4 million in employee-related costs through March 31, 2020. As of December 31, 2019, we estimated total costs of $145 million and cash expenditures of $98 million. Due to the termination of the preliminary agreement with a potential third-party purchaser in March 2020, we revised our estimated total costs to approximately $135 million and cash expenditures to $87 million. We estimate that the remaining costs of approximately $80 million, including approximately $48 million in employee-related costs and approximately $32 million in other associated costs, will be substantially incurred in 2020. The Company also believes that substantially all of the $87 million in estimated cash expenditures will occur in 2020. We expect these actions to be substantially complete in 2020.

The following table summarizes the restructuring actions above for the three months ended March 31, 2020 and the total costs to date for each plan:

The following table summarizes the changes to our restructuring liability during the three months ended March 31, 2020:



Millions of dollars	December 31, 2019		Charges to Earnings		Cash Paid			Non-Cash and Other			March 31, 2020
Employee termination costs	$	57	$	3	$	(12	)	$	—		$	48
Asset impairment costs	8		—		—			—			8
Facility exit costs	—		2		(2		)	—			—
Other exit costs	12		—		(3		)	(2		)	7
Total	$	77	$	5	$	(17	)	$	(2	)	$	63

The following table summarizes the restructuring charges by operating segment for the period presented:



	Three Months Ended
Millions of dollars	March 31, 2020
North America	$	—
EMEA	5
Latin America	—
Asia	—
Corporate / Other	—
Total	$	5

Millions of dollars

EMEA fixed cost actions