ASSETS IMPAIRMENTS AND RESTRUCTURING

9 Months Ended

Sep. 30, 2020

Restructuring Costs and Asset Impairment Charges [Abstract]

ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES, NET


(Dollars in millions)	Third Quarter				First Nine Months
Fixed Asset Impairments	2020		2019		2020		2019
Site optimizations
AFP - Tire additives (1)	$	—	$	—	$	5	$	—
AM - Performance films (2)	—		—		4		—
AFP - Animal nutrition (3)	—		—		3		—
Discontinuation of growth initiatives (4)	—		—		8		—
	—		—		20		—
Intangible Asset Impairments
AFP - Tradenames (5)	—		—		123		—
AFP - Customer relationships (6)	—		—		2		—
	—		—		125		—
Severance Charges
Business improvement and cost reduction actions (7)	46		1		46		45
CI & AFP - Singapore (8)	2		—		5		—
Site optimizations
AM - Advanced interlayers (9)	3		—		3		—
AFP - Tire additives (1)	1		—		1		—
AM - Performance films (2)	—		—		3		—
AFP - Animal nutrition (3)	—		—		1		—
	52		1		59		45
Other Restructuring Costs
Cost reduction initiatives (7)	7		1		7		3
Discontinuation of growth initiatives contract termination fees (4)	1		—		4		—
AFP - Discontinued capital project (10)	—		—		—		4
	8		1		11		7

Total	$	60	$	2	$	215	$	52

(1)Fixed asset impairments and severance in the Additives & Functional Products ("AFP") segment from the closure of a tire additives manufacturing facility in Asia Pacific as part of ongoing site optimization.

(2)Fixed asset impairments and severance in the Advanced Materials ("AM") segment from the closure of a performance films manufacturing facility in North America as part of ongoing site optimization.

(3)Fixed asset impairments and severance in the AFP segment from the closure of an animal nutrition manufacturing facility in Asia Pacific as part of ongoing site optimization.

(4)Fixed asset impairments and contract termination fees resulting from management's decision to discontinue growth initiatives for polyester based microfibers, including Avra™ performance fibers, the financial results of which were not allocated to an operating segment and reported in "Other".

(5)Intangible asset impairment charges in the AFP segment tire additives business to reduce the carrying values of the Crystex™ and Santoflex™ tradenames to the estimated fair values. The estimated fair values were determined using an income approach, specifically, the relief from royalty method, including some unobservable inputs. The impairments are primarily the result of weakened demand in transportation markets impacted by COVID-19 and increased competitive pricing pressure as a result of global capacity increases.

(6)Intangible asset impairment charge in the AFP segment for customer relationships.

(7)Severance and related costs as part of business improvement and cost reduction initiatives which were reported in "Other".

(8)Severance charges of $1 million and $4 million in third quarter and first nine months 2020, respectively, in the Chemical Intermediates ("CI") segment, and $1 million in both third quarter and first nine months 2020 in the AFP segment, resulting from the previously disclosed plan to discontinue production of certain products at the Singapore manufacturing site. Restructuring charges totaling up to $50 million are expected through 2020 and 2021 for this action.

(9)Severance in the AM segment due to the closure of an advanced interlayers manufacturing facility in North America as part of ongoing site optimization. In addition, accelerated depreciation of $7 million was recognized in "Cost of sales" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in third quarter 2020 related to the closure of this facility. Management expects total charges of up to $30 million, mostly in "Cost of sales" and in "Asset impairments and restructuring charges, net" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings, in 2020 and 2021 for the closure of this facility.

(10)Additional restructuring charge related to a capital project in the AFP segment that was discontinued in 2016.

Changes in Reserves

The following table summarizes the changes in asset impairments and restructuring charges, the non-cash reductions attributable to asset impairments, and the cash reductions in restructuring reserves for severance costs and site closure costs paid in first nine months 2020 and full year 2019:


(Dollars in millions)	Balance at January 1, 2020		Provision/ Adjustments		Non-cash Reductions/ Additions		Cash Reductions		Balance at September 30, 2020
Non-cash charges	$	—	$	145	$	(145)	$	—	$	—
Severance costs	17		60		—		(12)		65
Other restructuring costs	11		10		—		(8)		13
Total	$	28	$	215	$	(145)	$	(20)	$	78


(Dollars in millions)	Balance at January 1, 2019		Provision/ Adjustments		Non-cash Reductions/ Additions		Cash Reductions		Balance at December 31, 2019
Non-cash charges	$	—	$	72	$	(72)	$	—	$	—
Severance costs	6		45		—		(34)		17
Other restructuring costs	8		9		1		(7)		11
Total	$	14	$	126	$	(71)	$	(41)	$	28

Substantially all severance costs remaining are expected to be applied to the reserves within one year.