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Repositioning and Other Charges

6 Months Ended

Jun. 30, 2011

Repositioning And Other Charges [Abstract]

Note 4. Repositioning and Other Charges

	A summary of repositioning and other charges follows:

			Three Months Ended				Six Months Ended
			June 30,				June 30,
			2011		2010		2011		2010
Severance		$	16	$	25	$	43	$	57
Asset impairments			-		1		10		9
Exit costs			1		-		12		4
Adjustments			(10)		(3)		(14)		(8)
Total net repositioning charge			7		23		51		62

Asbestos related litigation charges,
net of insurance			40		49		78		87
Probable and reasonably estimable
environmental liabilities			50		55		101		101
Other			(3)		-		(3)		18

Total net repositioning and other charges		$	94	$	127	$	227	$	268

The following table summarizes the pretax classification of total net repositioning and other charges by income statement caption:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2011		2010		2011		2010
Cost of products and services sold	$	84	$	122	$	202	$	260
Selling, general and administrative expenses		10		5		25		8
	$	94	$	127	$	227	$	268

The following table summarizes the pretax impact of total net repositioning and other charges by segment:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2011		2010		2011		2010
Aerospace	$	(6)	$	6	$	(6)	$	6
Automation and Control Solutions		12		5		45		29
Specialty Materials		-		-		13		11
Transportation Systems		40		47		76		105
Corporate		48		69		99		117
	$	94	$	127	$	227	$	268

In the quarter ended June 30, 2011, we recognized repositioning charges totaling $17 million primarily for severance costs related to workforce reductions of 360 manufacturing and administrative positions in our Automation and Control Solutions and Aerospace segments. The workforce reductions were related to cost savings actions taken in connection with our ongoing functional transformation and productivity initiatives and the consolidation of U.S. repair facilities in our Aerospace segment. Also, $10 million of previously established accruals for severance at our Aerospace segment were returned to income in the second quarter of 2011 due to fewer employee separations than originally planned associated with prior severance programs.

In the quarter ended June 30, 2010, we recognized repositioning charges totaling $26 million primarily for severance costs related to workforce reductions of 350 manufacturing and administrative positions in our Aerospace, Transportation Systems and Automation and Control Solutions segments. The workforce reductions were related to cost savings actions taken in connection with our ongoing functional transformation and productivity initiatives and factory transitions in our Aerospace segment to more cost-effective locations.

In the six months ended June 30, 2011, we recognized repositioning charges totaling $65 million including severance costs of $43 million related to workforce reductions of 946 manufacturing and administrative positions in our Automation and Control Solutions, Aerospace and Specialty Materials segments. The workforce reductions were primarily related to cost savings actions taken in connection with our ongoing functional transformation and productivity initiatives, factory transitions in connection with acquisition-related synergies in our Automation and Control Solutions segment, the exit from and/or rationalization of certain product lines and markets in our Specialty Materials and Automation and Control Solutions segments, the consolidation of U.S. repair facilities in our Aerospace segment, and an organizational realignment of a business in our Automation and Control Solutions segment. The repositioning charge also included asset impairments of $10 million principally related to manufacturing plant and equipment associated with the exit of a product line and a factory transition as discussed above. The repositioning charge also included exit costs of $12 million principally for costs to terminate contracts, including an operating lease, related to the exit of a market and a factory transition as discussed above. Also, $14 million of previously established accruals, primarily for severance at our Aerospace and Automation and Control Solutions segments, were returned to income in the first six months of 2011 due principally to fewer employee separations than originally planned associated with prior severance programs.

In the six months ended June 30, 2010, we recognized repositioning charges totaling $70 million including severance costs of $57 million related to workforce reductions of 967 manufacturing and administrative positions primarily in our Automation and Control Solutions, Transportation Systems and Aerospace segments. The workforce reductions were primarily related to the planned shutdown of certain manufacturing facilities in our Automation and Control Solutions and Transportation Systems segments, cost savings actions taken in connection with our ongoing functional transformation and productivity initiatives and factory transitions in our Aerospace segment to more cost-effective locations. The repositioning charge also included asset impairments of $9 million principally related to manufacturing plant and equipment in facilities scheduled to close.

The following table summarizes the status of our total repositioning reserves:

		Severance		Asset		Exit
		Costs		Impairments		Costs		Total

December 31, 2010	$	276	$	-	$	34	$	310
Charges		43		10		12		65
Usage - cash		(72)		-		(9)		(81)
Usage - noncash		-		(10)		-		(10)
Foreign currency translation		3		-		-		3
Adjustments		(14)		-		-		(14)

June 30, 2011	$	236	$	-	$	37	$	273

Certain repositioning projects in our Aerospace, Automation and Control Solutions and Transportation Systems segments included exit or disposal activities, the costs related to which will be recognized in future periods when the actual liability is incurred. The nature of these exit or disposal costs includes asset set-up and moving, product recertification and requalification, and employee retention, training and travel. The following tables summarize by segment, expected, incurred and remaining exit and disposal costs related to 2011 and 2010 repositioning actions which we were not able to recognize at the time the actions were initiated.


				Automation and
2011 Repositioning Actions		Aerospace		Control Solutions		Total

Expected exit and disposal costs	$	5	$	2	$	7
Costs incurred during:
Current year-to-date		-		-		-
Remaining exit and disposal costs	$	5	$	2	$	7


				Automation and		Transportation
2010 Repositioning Actions		Aerospace		Control Solutions		Systems		Total

Expected exit and disposal costs	$	9	$	10	$	3	$	22
Costs incurred during:
Year ended December 31, 2010		-		-		-		-
Current year-to-date		-		(3)		-		(3)

Remaining exit and disposal costs	$	9	$	7	$	3	$	19

In the quarter ended June 30, 2011, we recognized a charge of $50 million for environmental liabilities deemed probable and reasonably estimable in the quarter. We also recognized a charge of $40 million primarily representing an update to our estimated liability for the resolution of Bendix related asbestos claims as of June 30, 2011, net of probable insurance recoveries. Environmental and Asbestos matters are discussed in detail in Note 15, Commitments and Contingencies.

In the quarter ended June 30, 2010, we recognized a charge of $55 million for environmental liabilities deemed probable and reasonably estimable in the quarter. We also recognized a charge of $49 million primarily representing an update to our estimated liability for the resolution of Bendix related asbestos claims as of June 30, 2010, net of probable insurance recoveries.

In the six months ended June 30, 2011, we recognized a charge of $101 million for environmental liabilities deemed probable and reasonably estimable in the period. We also recognized a charge of $78 million primarily representing an update to our estimated liability for the resolution of Bendix related asbestos claims as of June 30, 2011, net of probable insurance recoveries.

In the six months ended June 30, 2010, we recognized a charge of $101 million for environmental liabilities deemed probable and reasonably estimable in the period. We also recognized a charge of $87 million primarily representing an update to our estimated liability for the resolution of Bendix related asbestos claims as of June 30, 2010, net of probable insurance recoveries. We also recognized other charges of $18 million in connection with the evaluation of potential settlements of certain legal matters.