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2018 Global Restructuring Program

9 Months Ended

Sep. 30, 2019

2018 Global Restructuring Program

Restructuring Cost and Reserve

Restructuring and Related Activities Disclosure

2018 Global Restructuring Program

In January 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, asset write-offs and pension settlement and curtailment charges. Restructuring charges in 2019 are expected to be $375 to $425 pre-tax ($300 to $345 after tax).

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

	Three Months Ended September 30								Nine Months Ended September 30
	2019				2018				2019				2018
Cost of products sold:
Charges for workforce reductions	$	1			$	31			$	33			$	156
Asset impairments	—				—				—				74
Asset write-offs	18				16				45				102
Incremental depreciation	57				47				189				115
Other exit costs	28				9				64				18
Total	104				103				331				465
Marketing, research and general expenses:
Charges (adjustments) for workforce reductions	(4		)		(13		)		(12		)		257
Other exit costs	25				39				78				84
Total	21				26				66				341
Other (income) and expense, net	(181		)		—				(182		)		—
Nonoperating expense(a)	—				20				—				50
Total charges	(56		)		149				215				856
Provision for income taxes	23				(30		)		(35		)		(197		)
Net charges	(33		)		119				180				659
Net impact related to equity companies and noncontrolling interests	—				—				1				(10		)
Net charges attributable to Kimberly-Clark Corporation	$	(33	)		$	119			$	181			$	649

(a) Represents non-cash pension settlement charges resulting from restructuring actions. 

The asset impairment charges were measured based on the excess of the carrying value of the impacted asset groups over their fair values. These fair values were measured by 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.

Other (income) and expense, net in 2019 includes a pre-tax gain of approximately $182 on the sale of a manufacturing facility and associated real estate which were disposed of as part of the restructuring.

The following summarizes the restructuring liabilities activity:

		2019				2018
Restructuring liabilities at January 1		$	210			$	—
Charges for workforce reductions and other cash exit costs		159				512
Cash payments		(230		)		(229		)
Currency and other		3				(20		)
Restructuring liabilities at September 30		$	142			$	263

Restructuring liabilities of $84 and $138 are recorded in Accrued expenses and other current liabilities and $58 and $125 are recorded in Other Liabilities as of September 30, 2019 and 2018, respectively. The impact related to restructuring charges is recorded in Operating working capital and Other Operating Activities, as appropriate, in our consolidated cash flow statements.

Through September 30, 2019, cumulative pre-tax charges for the 2018 Global Restructuring Program were $1.3 billion ($1.0 billion after tax).

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- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 420
-URI http://asc.fasb.org/topic&trid=2175745

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