Restructuring Costs

3 Months Ended

Mar. 31, 2014

For the three months ended March 31, 2014, we recognized $149 million of restructuring costs in Other operating (income) expenses in the Consolidated Statement of Results of Operations, which included $142 million of employee separation costs and $7 million of long-lived asset impairments. The restructuring costs in 2014 were primarily related to a reduction in workforce at our Gosselies, Belgium facility. For the three months ended March 31, 2013, we recognized $7 million of restructuring costs, all of which related to employee separation costs.

Restructuring costs for the year ended December 31, 2013 were $200 million and were recognized in Other operating (income) expenses in the Consolidated Statement of Results of Operations. The 2013 restructuring costs included $151 million of employee separation costs, $41 million of long-lived asset impairments and $8 million of other restructuring costs. The most significant charges in 2013 were for the restructuring of management and support functions and the closure or downsizing of several facilities related to our mining business.

Restructuring costs are a reconciling item between Segment profit and Consolidated profit before taxes. See Note 15 for more information.

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 2013 and 2014 employee separation activity:



(Millions of dollars)
	Total
Liability balance at December 31, 2012	$	29
Increase in liability (separation charges)	151
Reduction in liability (payments and other adjustments)	(91		)
Liability balance at December 31, 2013	$	89
Increase in liability (separation charges)	142
Reduction in liability (payments and other adjustments)	(37		)
Liability balance at March 31, 2014	$	194

The remaining liability balances as of March 31, 2014 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 2014.

In December 2013, we announced a restructuring plan for our Gosselies, Belgium facility. This restructuring plan is designed to improve the competitiveness of our European manufacturing footprint and achieve competitiveness in our European operations by refocusing our current Gosselies operations on final machine assembly, test and paint with limited component and fabrication operations. This action will include reshaping our supply base for more efficient sourcing, improving factory efficiencies and workforce reductions and was approved by the Belgian Minister of Employment in February 2014. We estimate the total employee cash separation costs to be about $300 million before tax, which represents substantially all of the restructuring costs to be incurred under the restructuring plan. We expect to recognize substantially all of these separation-related charges throughout 2014. For the three months ended March 31, 2014, we recognized $128 million of employee separation costs relating to this restructuring plan. The majority of these costs will be paid throughout the remainder of 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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