Restructuring Costs

3 Months Ended

Mar. 31, 2021

Restructuring costs

Our accounting for employee separations is dependent upon how the particular program is designed. For voluntary programs, we recognize eligible separation costs at the time of employee acceptance unless the acceptance requires explicit approval by the company. For involuntary programs, we recognize eligible costs 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, 2021 and 2020 were as follows:



(Millions of dollars)	Three Months Ended March 31










	2021		2020
Employee separations 1	$	45	$	11
Contract terminations 1	—		1
Long-lived asset impairments 1	11		9

Other 2	8		16
Total restructuring costs	$	64	$	37

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

For the three months ended March 31, 2021, the restructuring costs were primarily related to actions across the company including strategic actions to address certain product lines. 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.

Beginning in 2021, all restructuring costs are excluded from segment profit. In 2020, only certain restructuring costs were excluded from segment profit. Restructuring costs included in segment profit were as follows:


	Three Months Ended March 31
(Millions of dollars)		2021		2020

Construction Industries		$	—	$	1
Resource Industries		—		1
Energy & Transportation		—		4
Financial Products Segment		—		—

The following table summarizes the 2021 and 2020 employee separation activity:



(Millions of dollars)	Three Months Ended March 31
	2021		2020
Liability balance, beginning of period	$	164	$	48
Increase in liability (separation charges)	45		11
Reduction in liability (payments)	(55)		(16)
Liability balance, end of period	$	154	$	43

Most of the liability balance at March 31, 2021 is expected to be paid in 2021 and 2022.