2018 Global Restructuring Program

3 Months Ended

Mar. 31, 2018

Restructuring and Related Activities Disclosure

2018 Global Restructuring Program

On January 23, 2018, we announced the 2018 Global Restructuring Program to reduce our structural cost base by streamlining and simplifying our manufacturing supply chain and overhead organization. We expect to close or sell approximately 10 manufacturing facilities and expand production capacity at several others. We expect to exit or divest some lower-margin businesses that generate approximately 1 percent of our net sales. The sales are concentrated in our consumer tissue business segment. The restructuring is expected to impact our organizations in all major geographies. Workforce reductions are expected to be in the range of 5,000 to 5,500. Certain capital appropriations under the 2018 Global Restructuring Program are being finalized. Accounting for actions related to each appropriation will commence when the appropriation is authorized for execution.

The restructuring is expected to be completed by the end of 2020, with total costs anticipated to be $1.7 billion to $1.9 billion pre-tax ($1.35 billion to $1.5 billion after tax). Cash costs are expected to be $900 to $1.0 billion, primarily related to workforce reductions. Non-cash charges are expected to be $800 to $900 pre-tax and will primarily consist of incremental depreciation and asset impairments. Restructuring charges in 2018 are expected to be $1.2 billion to $1.35 billion pre-tax ($950 to $1.05 billion after tax).

The following charges were incurred in connection with the 2018 Global Restructuring Program:



	Three Months Ended March 31, 2018
Cost of products sold:
Charges for workforce reductions	$	119
Asset impairments	74
Asset write-offs	55
Incremental depreciation	28
Other exit costs	1
Total	277
Marketing, research and general expenses:
Charges for workforce reductions	286
Other exit costs	14
Total	300
Total charges	577
Provision for income taxes	(143		)
Net charges	434
Net impact related to equity companies and noncontrolling interests	(6		)
Net charges attributable to Kimberly-Clark Corporation	$	428

The asset impairments charge measurement was based on the excess of the carrying value of the impacted asset groups over their fair values. These fair values were measured using discounted cash flows, expected over the limited time the assets would remain in use, and as a result, the assets were essentially written off. The use of discounted cash flows represents a level 3 measure under the fair value hierarchy.

See Note 8 for charges by segment.

The following summarizes the restructuring liabilities activity for the quarter:



	2018
Restructuring liabilities at January 1	$	—
Charges for workforce reductions and other exit costs	418
Cash payments	(14		)
Currency and other	3
Restructuring liabilities at March 31	$	407