Exit or Disposal Activities

9 Months Ended

Oct. 01, 2011

Exit or Disposal Activities [Abstract]

Note 3 Exit or disposal activities

The Company views its continued spending on cost-reduction activities as part of its ongoing operating principles to provide greater visibility in achieving its long-term profit growth targets. Initiatives undertaken are currently expected to recover cash implementation costs within a five-year period of completion. Upon completion (or as each major stage is completed in the case of multi-year programs), the project begins to deliver cash savings and/or reduced depreciation.

2011 activities

During 2011, the Company incurred exit costs related to ongoing programs which will result in cost of goods sold (COGS) and selling, general and administrative (SGA) expense savings.

Total charges incurred during the quarter and year-to-date periods ended October 1, 2011 and October 2, 2010 were as follows:

		Quarter ended, October 1, 2011					Quarter ended, October 2, 2010
		COGS		SGA		Total		COGS		SGA		Total
(millions)		program		programs		Total		program		programs		Total
Employee severance	$	1	$	1	$	2	$	-	$	1	$	1
Other cash costs (a)		1		-		1		-		1		1
Asset write-offs		1		-		1		-		-		-
Retirement benefits (b)		-		6		6		-		5		5
Total	$	3	$	7	$	10	$	-	$	7	$	7
(a) Includes cash costs for equipment removal and relocation.
(b) Pension plan curtailment losses and special termination benefits.


	Year-to-date period ended, October 1, 2011						Year-to-date period ended, October 2, 2010
		COGS		SGA		Total		COGS		SGA		Total
(millions)		program		programs		Total		program		programs		Total
Employee severance	$	5	$	1	$	6	$	2	$	2	$	4
Other cash costs (a)		1		-		1		-		6		6
Asset write-offs		2		-		2		-		-		-
Retirement benefits (b)		-		12		12		1		5		6
Total	$	8	$	13	$	21	$	3	$	13	$	16
(a) Includes cash costs for equipment removal and relocation.
(b) Pension plan curtailment losses and special termination benefits.

Total program costs incurred through October 1, 2011 were as follows:

		Total program costs through
		October 1, 2011
		COGS		SGA		Total
(millions)		program		programs		Total
Employee severance	$	23	$	21	$	44
Other cash costs (a)		7		15		22
Asset write-offs		3		-		3
Retirement benefits (b)		3		17		20
Total	$	36	$	53	$	89
(a) Includes cash costs for equipment removal and relocation.
(b) Pension plan curtailment losses and special termination benefits.

In 2009, the Company commenced various COGS related cost reduction programs. Refer to page 36 of the Company's 2010 Annual Report on Form 10-K for further information on these initiatives. Costs impacted the following operating segments during the quarter and year-to-date periods ended October 1, 2011 and October 2, 2010.

		COGS program


		Quarter ended				Year-to-date period ended
(millions)		October 1, 2011		October 2, 2010		October 1, 2011		October 2, 2010
North America	$	-	$	-	$	-	$	1
Europe		3		-		8		2
Total	$	3	$	-	$	8	$	3

These costs represent employee severance and other cash costs associated with the elimination of hourly and salaried positions, as well as non-cash asset write offs at various global manufacturing facilities. To date, we have incurred $36 million in total exit costs for this program. The costs have impacted our operating segments, as follows (in millions): North America-$14; Europe-$21; and Asia Pacific-$1. Based on forecasted exchange rates, the Company currently expects to incur an additional $7 million in exit costs for this program during 2011.

In 2009, the Company commenced various SGA programs which resulted in an improvement in the efficiency and effectiveness of various support functions. Refer to page 37 of the Company's 2010 Annual Report on Form 10-K for further information on these initiatives. Costs for these programs impacted the following operating segments during the quarter and year-to-date periods ended October 1, 2011 and October 2, 2010 as follows:

		SGA programs


		Quarter ended				Year-to-date period ended
(millions)		October 1, 2011		October 2, 2010		October 1, 2011		October 2, 2010
North America	$	7	$	6	$	13	$	10
Europe		-		1		-		1
Asia Pacific (a)		-		-		-		2
Total	$	7	$	7	$	13	$	13
(a) Includes Australia, Asia and South Africa.

These costs represent severance and other cash costs associated with the elimination of positions. To date, we have incurred $53 million in exit costs for these programs. The costs have impacted our operating segments as follows (in millions): North America-$34; Europe-$15; Asia Pacific-$3; and Latin America-$1. Based on forecasted exchange rates, the Company currently expects to incur an additional $1 million in exit costs for these programs during 2011.

Reserves for the COGS and SGA programs are primarily for employee severance and will be paid out by the end of 2011. The detail is as follows:

		Balance		Accruals		Payments		Balance
(millions)		January 1, 2011		Accruals		Payments		October 1, 2011
COGS program	$	2	$	5	$	(6)	$	1
SGA programs		3		1		(3)		1
Total	$	5	$	6	$	(9)	$	2