Restructuring Actions and Exit Activities

9 Months Ended

Sep. 30, 2019

Restructuring Actions and Exit Activities

Restructuring Actions and Exit Activities

NOTE 5. Restructuring Actions and Exit Activities

2019 Restructuring Actions:

During the second quarter of 2019, in light of a slower than expected 2019 sales, management approved and committed to undertake certain restructuring actions. These actions impacted approximately 2,000 positions worldwide, including attrition. The Company recorded a second quarter 2019 pre-tax charge of $148 million. The restructuring charges were recorded in the income statement as follows:

(Millions)	Second Quarter 2019
Cost of sales	$	18
Selling, general and administrative expenses		89
Research, development and related expenses		5
Total operating income impact		112
Other expense (income), net		36
Total income before taxes impact	$	148

The operating income impact of these restructuring charges are summarized by business segment as follows:

	Second Quarter 2019
(Millions)	Employee-Related		Asset-Related		Total
Safety and Industrial	$	11	$	—	$	11
Transportation and Electronics		8		—		8
Health Care		6		—		6
Consumer		5		—		5
Corporate and Unallocated		42		40		82
Total Operating Expense	$	72	$	40	$	112

The 2019 actions included a voluntary early retirement incentive (further discussed in Note 11), the charge for which is included in other expense (income), net above.

Restructuring actions, including cash and non-cash impacts, follow:

(Millions)	Employee-Related		Asset-Related		Total
Expense incurred in the second quarter of 2019	$	108	$	40	$	148
Non-cash changes		(36)		(40)		(76)
Cash payments		(41)		—		(41)
Adjustments		(14)		—		(14)
Accrued restructuring action balances as of September 30, 2019	$	17	$	—	$	17

Remaining activities related to this restructuring are expected to be completed largely through the first quarter of 2020.

2018 Restructuring Actions:

During the second quarter and fourth quarter of 2018, management approved and committed to undertake certain restructuring actions related to addressing corporate functional costs following the Communication Markets Division divestiture. These actions affected approximately 1,200 positions worldwide and resulted in a second quarter 2018 pre-tax charge of $105 million and a fourth quarter pre-tax charge of $22 million, net of adjustments for reductions in cost estimates of $10 million, essentially all within Corporate and Unallocated. The restructuring charges were recorded in the income statement as follows:

(Millions)	Second Quarter 2018		Fourth Quarter 2018
Cost of sales	$	12	$	15
Selling, general and administrative expenses		89		16
Research, development and related expenses		4		1
Total	$	105	$	32

Restructuring actions, including cash and non-cash impacts, follow:

(Millions)	Employee-Related		Asset-Related		Total
Expense incurred in the second quarter and fourth quarter of 2018	$	125	$	12	$	137
Non-cash changes		—		(12)		(12)
Cash payments		(24)		—		(24)
Adjustments		(17)		—		(17)
Accrued restructuring action balances as of December 31, 2018	$	84	$	—	$	84
Cash payments		(68)		—		(68)
Adjustments		(3)		—		(3)
Accrued restructuring action balances as of September 30, 2019	$	13	$	—	$	13

Remaining activities related to this restructuring are expected to be largely completed through 2019.