v3.5.0.2
Employee Separation / Asset Related Charges, Net
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9 Months Ended |
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| Restructuring Charges [Abstract] |
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| Employee Separation / Asset Related Charges, Net |
Employee Separation / Asset Related Charges, Net La Porte Plant, La Porte, Texas In March 2016, DuPont announced its decision to not re-start the Agriculture segment’s insecticide manufacturing facility at the La Porte site located in La Porte, Texas. The facility manufactures Lannate® and Vydate® insecticides and has been shut down since November 2014. As a result of this decision, during the nine months ended September 30, 2016, a pre-tax charge of $75 was recorded in employee separation / asset related charges, net which included $41 of asset related charges, $18 of contract termination costs, and $16 of employee severance and related benefit costs.
2016 Global Cost Savings and Restructuring Plan At September 30, 2016, total liabilities related to the program were $199. A complete discussion of restructuring initiatives is included in the company's 2015 Annual Report in Note 4, "Employee Separation / Asset Related Charges, Net."
Account balances and activity for the restructuring program are summarized below: | | | | | | | | | | | | | | | Severance and Related Benefit Costs | Asset Related Charges | Other Non-Personnel Charges1 | Total | | $ | 648 |
| $ | — |
| $ | 32 |
| $ | 680 |
| Payments | (335 | ) | — |
| (25 | ) | (360 | ) | Net translation adjustment | 3 |
| — |
| — |
| 3 |
| Other adjustments | (135 | ) | 53 |
| 11 |
| (71 | ) | Asset write-offs | — |
| (53 | ) | — |
| (53 | ) | | $ | 181 |
| $ | — |
| $ | 18 |
| $ | 199 |
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| | 1. | Other non-personnel charges consist of contractual obligation costs. |
During the three months ended September 30, 2016, a net charge of $17 was recorded, consisting of $14 of employee separation / asset related charges, net and $3 in other (loss) income, net. The charge was associated with the identification of additional asset related projects in certain segments. During the nine months ended September 30, 2016, a net (benefit) charge of $(71) was recorded, consisting of $(74) in employee separation / asset related charges, net and $3 in other (loss) income, net. This was primarily due to a reduction in severance and related benefit costs partially offset by the identification of additional projects in certain segments. The reduction in severance and related benefit costs was driven by the elimination of positions at a lower cost than expected as a result of redeployments and attrition as well as lower than estimated individual severance costs.
The net charge (benefit) related to the segments for the three and nine months ended September 30, 2016 was as follows: | | | | | | | | | Three Months Ended | Nine Months Ended | | September 30, | | | 2016 | 2016 | Agriculture | $ | 13 |
| $ | 29 |
| Electronics & Communications | 2 |
| (13 | ) | Industrial Biosciences | — |
| (4 | ) | Nutrition & Health | 1 |
| (12 | ) | Performance Materials | (2 | ) | (7 | ) | Protection Solutions | — |
| (10 | ) | Other | — |
| 3 |
| Corporate expenses | 3 |
| (57 | ) | | $ | 17 |
| $ | (71 | ) |
2014 Restructuring Program At September 30, 2016, total liabilities related to the program were $33. A complete discussion of restructuring initiatives is included in the company's 2015 Annual Report in Note 4, "Employee Separation / Asset Related Charges, Net."
Account balances and activity related to the program are summarized below: | | | | | | | | | | | | Severance and Related Benefit Costs | Other Non-Personnel Charges 1 | Total | | $ | 76 |
| $ | 2 |
| $ | 78 |
| Payments | (45 | ) | — |
| (45 | ) | | $ | 31 |
| $ | 2 |
| $ | 33 |
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| | 1. | Other non-personnel charges consist of contractual obligation costs. |
During the nine months ended September 30, 2015, a $2 net adjustment to the estimated costs associated with the 2014 restructuring program was recorded in employee separation / asset related charges, net in the company's interim Consolidated Income Statements. This was primarily due to the identification of additional projects in certain segments, offset by lower than estimated individual severance costs and workforce reductions achieved through non-severance programs. The adjustments related to the segments for the nine months ended September 30, 2015 were as follows: Agriculture - $4, Electronics & Communications - $(11), Industrial Biosciences - $1, Nutrition & Health - $4, Performance Materials - $2, Protection Solutions - $(1), and Other - $3.
Asset Impairment During the third quarter 2016, the company completed its annual goodwill and indefinite-lived intangible assets impairment tests. The company recognized a $158 pre-tax impairment charge in employee separation / asset related charges, net during the three months ended September 30, 2016 related to indefinite-lived intangible trade names within the Industrial Biosciences segment. In connection with business strategy reviews and brand realignment conducted during the third quarter 2016, the company decided to phase out the use of certain acquired trade names within the segment resulting in a change from an indefinite life to a finite useful life for these assets. As a result of these changes, the carrying value of the trade name assets exceeded the fair value.
The basis of the fair value for the charges was calculated utilizing an income approach (relief from royalty method) using Level 3 inputs within the fair value hierarchy, as described in the company’s 2015 Annual Report in Note 1, “Summary of Significant Accounting Policies.” The key assumptions used in the calculation included projected revenue, royalty rates and discount rates. These key assumptions involve management judgment and estimates relating to future operating performance and economic conditions that may differ from actual cash flows. The remaining net book value of the trade names at September 30, 2016 was approximately $28, which represents fair value.
Based on the results of the annual impairment test there were no other indicators of impairment of goodwill and indefinite-lived intangible assets at September 30, 2016.
Cost Basis Investment Impairment During the first quarter 2015, a $38 pre-tax impairment charge was recorded in employee separation / asset related charges, net within the Other segment. The majority related to a cost basis investment in which the assessment resulted from the venture's revised operating plan reflecting underperformance of its European wheat based ethanol facility and deteriorating European ethanol market conditions. As a result, the carrying value of DuPont's 6 percent cost basis investment in this venture exceeded its fair value by $37, such that an impairment charge was recorded. |
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- DefinitionThe 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.
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