Employee separation charges

6 Months Ended

Jun. 30, 2012

Employee separation charges [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

Employee separation charges

In 2011, we reported employee separation charges of $112 million in Other operating (income) expenses in the Consolidated Statement of Results of Operations primarily related to the acquisition of Bucyrus. The majority of the charges were assigned to the Resource Industries segment.

For the three and six months ended June 30, 2012, we recognized employee separation charges of $9 million and $41 million in Other operating (income) expenses in the Consolidated Statement of Results of Operations primarily related to the closure of the Electro-Motive Diesel facility located in London, Ontario. The majority of the charges were assigned to the Power Systems segment.

Our accounting for separations was dependent upon how the particular program was designed. For voluntary programs, eligible separation costs were recognized at the time of employee acceptance. For involuntary programs, eligible costs were recognized when management had approved the program, the affected employees had been properly notified and the costs were estimable.

In addition to the separation charges noted above, in first quarter of 2012 we reported $6 million of net gains associated with certain pension and other postretirement benefit plans, which were also recognized in Other operating (income) expenses in the Consolidated Statement of Results of Operations. See Note 9 for additional information.

The following table summarizes the 2011 and 2012 separation activity:

(Millions of dollars)
	Total
Liability balance at December 31, 2010	$	22
Increase in liability (separation charges)	$	112
Reduction in liability (payments and other adjustments)	(44		)
Liability balance at December 31, 2011	$	90
Increase in liability (separation charges)	$	41
Reduction in liability (payments and other adjustments)	(117		)
Liability balance at June 30, 2012	$	14

The remaining liability balances as of June 30, 2012 represent costs for employees that have either not yet separated from the Company or their full severance has not yet been paid. The majority of these remaining costs are expected to be paid in 2012 and 2013.