Restructuring Charges

During the three months ended March 31, 2014, we recognized restructuring charges of $15 million. We incurred these charges primarily in an effort to reposition our European and North American business to optimize our cost structure and improve our operational efficiency and effectiveness. The charges relate to the reduction in structural costs, including the elimination of headcount and consolidation of facilities within both our Water Infrastructure and Applied Water segments. During the three months ended March 31, 2013 we recognized restructuring charges of $5 million. These charges related to the reduction in structural costs, including the consolidation of facilities, within our Water Infrastructure segment.

The following table presents the components of restructuring expense for the three months ended March 31, 2014 and 2013.



	Three Months Ended
	March 31,
(in millions)	2014		2013
By component:
Severance and other charges	$	15	$	5
Reversal of restructuring accruals	—		—
Total restructuring charges	$	15	$	5

By segment:
Water Infrastructure	$	10	$	5
Applied Water	5		—
Corporate and other	—		—

The following table displays a rollforward of the restructuring accruals, presented on our Condensed Consolidated Balance Sheets within accrued and other current liabilities, for the three months ended March 31, 2014 and 2013.



(in millions)	2014			2013
Restructuring accruals - January 1	$	13		$	9
Restructuring charges	15			5
Cash payments	(9		)	(4		)
Restructuring accruals - March 31	$	19		$	10

By segment:
Water Infrastructure	$	14		$	7
Applied Water	5			3
Corporate and other	—			—

The following is a rollforward of employee position eliminations associated with restructuring activities for the three months ended March 31, 2014 and 2013.



	2014		2013
Planned reductions - January 1	51		54
Additional planned reductions	170		99
Actual reductions	(109	)	(52	)
Planned reductions - March 31	112		101

Total expected costs associated with actions that commenced during the three months ended March 31, 2014 are approximately $10 million for Water Infrastructure and approximately $7 million for Applied Water. These costs primarily comprise severance charges. Related to these actions we incurred approximately $9 million for Water Infrastructure and approximately $5 million for Applied Water during the three months ended March 31, 2014. We currently expect these actions to continue through the third quarter of 2014.

Total expected costs associated with actions that commenced during 2013 are approximately $33 million for Water Infrastructure. Approximately $31 million of the expected cost was incurred in 2013, $1 million was incurred during the three months ended March 31, 2014, and $1 million is expected to be incurred through the end of 2014. Total expected costs associated with actions that commenced during 2013 are approximately $10 million for Applied Water. Approximately $8 million of the expected cost was incurred in 2013 and $2 million is expected to be incurred through the end of 2014.