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REPOSITIONING AND OTHER CHARGES
3 Months Ended
Mar. 31, 2013
Repositioning And Other Charges [Abstract]  
Repositioning and Other Charges

Note 4. Repositioning and Other Charges

 A summary of repositioning and other charges follows:      
         
    Three Months Ended 
    March 31, 
    2013  2012 
 Severance$38 $15 
 Asset impairments 0  9 
 Exit costs 2  8 
 Reserve adjustments (7)  (7) 
  Total net repositioning charge 33  25 
        
 Asbestos related litigation charges, net of insurance 41  36 
 Probable and reasonably estimable environmental liabilities 54  61 
        
  Total net repositioning and other charges$128$122

The following table summarizes the pretax distribution of total net repositioning and other charges by income statement classification:
     
   Three Months Ended 
   March 31, 
   2013  2012 
 Cost of products and services sold$ 108 $ 119 
 Selling, general and administrative expenses  20   3 
  $ 128 $ 122 
        

The following table summarizes the pretax impact of total net repositioning and other charges by segment:
        
   Three Months Ended 
   March 31, 
   2013  2012 
 Aerospace$ 22 $ 1 
 Automation and Control Solutions  9   (1) 
 Performance Materials and Technologies  (1)   14 
 Transportation Systems  40   52 
 Corporate  58   56 
  $ 128 $ 122 
        

In the quarter ended March 31, 2013, we recognized repositioning charges totaling $ 40 million primarily for severance costs related to workforce reductions of 647 manufacturing and administrative positions mainly in our Aerospace and Automation and Control Solutions segments. The workforce reductions were primarily related to cost savings actions taken in connection with our productivity and ongoing functional transformation initiatives. Also, $7 million of previously established accruals in our Performance Materials and Technologies and Automation and Control Solutions segments were returned to income in the first quarter of 2013 due primarily to lower than expected costs in completing the exit of a product line.

In the quarter ended March 31, 2012 we recognized repositioning charges totaling $ 32 million including severance costs of $ 15 million related to workforce reductions of 618 manufacturing and administrative positions across all of our segments. The workforce reductions were primarily related to the planned shutdown of a manufacturing facility in our Transportation Systems segment, the exit from a product line in our Performance Materials and Technologies segment, and cost savings actions taken in connection with our productivity and ongoing functional transformation initiatives. The repositioning charge included asset impairments of $ 9 million principally related to manufacturing plant and equipment associated with the exit from a product line in our Performance Materials and Technologies segment. The repositioning charge also included exit costs of $ 8 million related to closure obligations associated with the planned shutdown of a manufacturing facility and exit of a product line as discussed above. Also, $7 million of previously established accruals for severance in our Automation and Control Solutions segment were returned to income in the first quarter of 2012 due primarily to fewer employee separations than originally planned associated with prior severance programs.

 

 The following table summarizes the status of our total repositioning reserves:  
           
   Severance Asset Exit   
     Costs   Impairments Costs Total 
           
 December 31, 2012$ 276$ -$ 47$ 323 
  Charges  38  -  2  40 
  Usage - cash  (28)  -  (3)  (31) 
  Usage - noncash  -  -  -  - 
  Foreign currency translation  (5)  -  (1)  (6) 
  Adjustments  (4)  -  (3)  (7) 
           
 March 31, 2013$ 277$ -$ 42$ 319 

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 table summarizes by segment, expected, incurred and remaining exit and disposal costs related to 2011 repositioning actions which we were not able to recognize at the time the actions were initiated. The exit and disposal costs related to the repositioning actions in 2013 and 2012 which we were not able to recognize at the time the actions were initiated were not significant.

 

    Automation    
    and Control Transportation  
2011 Repositioning Actions Aerospace Solutions Systems Total
         
Expected exit and disposal costs$ 15$ 12$ 7$ 34
Costs incurred during        
Year ended December 31, 2011  (1)  -  -  (1)
Year ended December 31, 2012  (2)  (3)  (1)  (6)
Current year-to-date  -  (1)  -  (1)
         
Remaining exit and disposal        
costs at March 31, 2013$12$8$6$26

In the quarter ended March 31, 2013, we recognized a charge of $ 54 million for environmental liabilities deemed probable and reasonably estimable in the quarter. We also recognized a charge of $ 41 million primarily representing an update to our estimated liability for the resolution of Bendix related asbestos claims as of March 31, 2013, net of probable insurance recoveries. Environmental and Asbestos matters are discussed in detail in Note 17, Commitments and Contingencies.

 

In the quarter ended March 31, 2012, we recognized a charge of $ 61 million for environmental liabilities deemed probable and reasonably estimable in the quarter. We also recognized a charge of $ 36 million primarily representing an update to our estimated liability for the resolution of Bendix related asbestos claims as of March 31, 2012, net of probable insurance recoveries.