Restructuring Costs

3 Months Ended

Mar. 31, 2020

Restructuring costs

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

Restructuring costs for the three months ended March 31, 2020 and 2019 were as follows:




(Millions of dollars)	Three Months Ended March 31
	2020		2019
Employee separations ¹	$	11	$	15
Contract terminations ¹	1		—
Long-lived asset impairments ¹	9		7
Other ²	16		26
Total restructuring costs	$	37	$	48

¹ Recognized in Other operating (income) expenses.
² Represents costs related to our restructuring programs, primarily for inventory write-downs, equipment relocation, building demolition and project management, all of which are primarily included in Cost of goods sold.

For the three months ended March 31, 2020, the restructuring costs were primarily related to a strategic action to address a certain product line, which were partially offset by a gain on the sale of a manufacturing facility that had been closed. For the three months ended March 31, 2019, the restructuring costs were primarily related to ongoing facility closures across the company.

Certain restructuring costs are a reconciling item between Segment profit and Consolidated profit before taxes. See Note 16 for more information.

The following table summarizes the 2019 and 2020 employee separation activity:




(Millions of dollars)
Liability balance at December 31, 2018	$	85
Increase in liability (separation charges)	48
Reduction in liability (payments)	(85		)
Liability balance at December 31, 2019	48
Increase in liability (separation charges)	11
Reduction in liability (payments)	(16		)
Liability balance at March 31, 2020	$	43

Most of the liability balance at March 31, 2020 is expected to be paid in 2020 and 2021.