Restructuring and Review of Strategic Alternatives and Operational Structure

July 2014 restructuring program

In July 2014, the Company announced a comprehensive restructuring program. The restructuring program, which builds on the Company's previously launched productivity and asset optimization plans, is focused on the closure of certain underperforming assets as well as the consolidation and realignment of other facilities. The Company is also implementing initiatives to reduce selling, general and administrative ("SG&A") expenses globally.

The Company expects to incur approximately $190 million in before-tax restructuring charges. The expected costs are $13 million in the North America segment, $126 million in the Europe segment, $33 million in the Latin America segment and $18 million in the Africa/Asia Pacific segment. As of December 31, 2014 and for the year ended December 31, 2014, aggregate and total costs incurred were $166.3 million. As of December 31, 2014 and for the year ended December 31, 2014, aggregate and total costs incurred were $6.8 million in the North America segment, $115.6 million in the Europe segment, $28.7 million in the Latin America segment and $15.2 million in the Africa/Asia Pacific segment, respectively. For the year ended December 31, 2014, approximately $151.7 million of these charges were recorded in the Cost of sales caption and $14.6 million were recorded in SG&A expenses in the Consolidated Statements of Operations and Comprehensive Income (Loss), respectively. Restructuring costs incurred consist primarily of employee separation costs and asset-related costs to exit or realign facilities. The Company is also incurring other costs as outlined below. Changes in the restructuring reserve and activity for the year ended December 31, 2014 are below (in millions):



	Employee Separation Costs			Asset-Related Costs			Other Costs			Total
Total expected restructuring charges	$	50.0		$	120.0		$	20.0		$	190.0
Balance, December 31, 2013	$	—		$	—		$	—		$	—
Net provisions	38.7			117.5			10.1			166.3
Net benefits charged against the assets	—			(117.5		)	(8.4		)	(125.9		)
Payments	(4.3		)	—			(0.7		)	(5.0		)
Foreign currency translation	(2.0		)	—			—			(2.0		)
Balance, December 31, 2014	$	32.4		$	—		$	1.0		$	33.4
Remaining expected restructuring charges	$	11.3		$	2.5		$	9.9		$	23.7

Employee Separation Costs

The Company recorded employee separation costs of $38.7 million in the year ended December 31, 2014. The employee separation charges were $2.2 million in North America, $33.4 million in Europe, $2.7 million in Latin America, and $0.4 million in Africa/Asia Pacific for the year ended December 31, 2014.

Employee separation costs include severance, retention bonuses and pension costs. As of December 31, 2014, employee separation costs included severance charges for approximately 980 employees; approximately 770 of these employees were classified as manufacturing employees and approximately 210 of these employees were classified as non-manufacturing employees. The charges relate to involuntary separations and the amounts are based on current salary levels and past service periods and are either considered one-time employee termination benefits in accordance with ASC 420 - Exit or Disposal Cost Obligations or as charges for contractual termination benefits under ASC 712 - Compensation - Nonretirement Postemployment Benefits.

Asset-Related Costs

The Company recorded asset-related restructuring costs of $117.5 million in the year ended December 31, 2014. The long-lived asset impairment charges were $3.2 million in North America, $80.1 million in Europe, $20.9 million in Latin America and $13.3 million in Africa/Asia Pacific for the year ended December 31, 2014.

Asset-related costs consist of both asset write-downs and accelerated depreciation. Asset write-downs relate to the establishment of a new fair value basis for assets to be classified as held-for-sale or to be disposed of, as well as asset impairment charges for asset groups to be held-and-used in locations which are being restructured and it has been determined the undiscounted cash flows expected to result from the use and eventual disposition of the assets are less than their carrying value. Charges for accelerated depreciation relate to long-lived assets that will be taken out of service prior to the end of their normal service period. Management will continue to evaluate the recoverability of the carrying amount of its long-lived assets as the global restructuring program is executed.

To determine the fair value, a current appraisal of each impaired asset groups' machinery and equipment and real property, as applicable, was performed utilizing standard valuation approaches, which incorporate Level 3 inputs. The Company assesses impairment at the asset group level which represents the lowest level for which identifiable cash flows can be determined independent of other groups of assets and liabilities. The asset groups at the Company are primarily each manufacturing unit, unless the cash flows of the manufacturing unit are not independent due to shared production, distribution and sale of the finished product. The Company considered the expected net cash flows to be generated by the use of each asset group, as well as the expected cash proceeds from the disposition of the assets, if any, to determine fair value. The impairment charges were recorded in the Cost of sales caption in the Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company notes the plan to abandon a long-lived asset before the end of its previously estimated useful life is a change in accounting estimate per ASC 250 - Accounting Changes and Error Corrections. The annual depreciation impact from the asset write-downs and changes in estimated useful lives is immaterial.

Other Costs

The Company recorded other restructuring-type charges of $10.1 million for the year ended December 31, 2014. The other restructuring-type charges were $1.4 million in North America, $2.1 million in Europe, $5.1 million in Latin America and $1.5 million Africa/Asia Pacific in the year ended December 31, 2014.

Other restructuring-type charges are incurred as a direct result of the restructuring program. Such charges primarily include working capital write-downs not associated with normal operations, equipment relocation, termination of contracts and other immaterial costs.

February 2014 restructuring program

In February 2014, as part of the Company's productivity and asset optimization plans, the Company announced the permanent closure of two manufacturing facilities in the electric utility business in North America. The Company expected to incur $10.0 million to $12.0 million, half of which was expected to be non-cash, in pre-tax costs in 2014 related to the closure of these two manufacturing facilities. For the year ended December 31, 2014, the Company incurred charges of $10.1 million related to these closures and other cost reductions. The total employee separation costs were $4.2 million, asset-related costs were $1.6 million and other costs were $4.3 million for the year ended December 31, 2014. The accrual balances related to these activities are immaterial at December 31, 2014.

October 2014 review of strategic alternatives and operational structure

The Company’s Board conducted a review of the Company’s strategic alternatives and operational structure and as a result, on October 23, 2014, the Company's Board took action to authorize a plan to exit all of the Company's operations in Asia Pacific and Africa in order to simplify the Company's geographic portfolio and reduce operational complexity. The October divestiture plan is focused on the sale and closure of the Company's non-core assets. As part of this plan the Company completed the sale of its interest in PDP and PDEP. See Note 4 - Acquisitions and Divestitures for further detail.

The Company expects to incur approximately $14 million in pre-tax charges all within the North America segment. Charges incurred for the year ended December 31, 2014 were immaterial. Costs incurred consist primarily of legal and transaction fees for the dispositions.