Employee Separation Charges

9 Months Ended

Sep. 30, 2013

Employee separation charges [Abstract]

In 2012, we reported employee separation charges of $94 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 and separation programs in Europe. The majority of the charges were related to the Power Systems segment.

For the three and nine months ended September 30, 2013, we recognized employee separation charges of $34 million and $57 million, respectively, in Other operating (income) expenses in the Consolidated Statement of Results of Operations primarily related to separation programs in North America and Europe. The charges were related primarily to the Resource Industries and Construction Industries segments.

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.

The following table summarizes the 2012 and 2013 separation activity:



(Millions of dollars)
	Total
Liability balance at December 31, 2011	$	90
Increase in liability (separation charges)	94
Reduction in liability (payments and other adjustments)	(155		)
Liability balance at December 31, 2012	$	29
Increase in liability (separation charges)	57
Reduction in liability (payments and other adjustments)	(43		)
Liability balance at September 30, 2013	$	43

The remaining liability balances as of September 30, 2013 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 2013 and 2014.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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