Restructuring Costs

3 Months Ended

Mar. 31, 2015

Restructuring Charges [Abstract]

Restructuring Costs

Restructuring costs

For the three months ended March 31, 2015, we recognized $36 million of restructuring costs in Other operating (income) expenses in the Consolidated Statement of Results of Operations, which included $34 million of employee separation costs and $2 million of long-lived asset impairments and other restructuring costs. The restructuring costs in 2015 were primarily related to facility closures and workforce reductions in Europe. For the three months ended March 31, 2014, we recognized $149 million of restructuring costs, which included $142 million of employee separation costs and $7 million of long-lived asset impairments. For the first three months of 2014, the restructuring costs were primarily related to a reduction in workforce at our Gosselies, Belgium, facility.

Restructuring costs for the year ended December 31, 2014 were $441 million which included $382 million of employee separation costs, $33 million of long-lived asset impairments and $26 million of other restructuring costs. The restructuring costs in 2014 were primarily related to a reduction in workforce at our Gosselies, Belgium, facility.

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 2014 and 2015 employee separation activity:

(Millions of dollars)	Total
Liability balance at December 31, 2013	$	89
Increase in liability (separation charges)	382
Reduction in liability (payments and other adjustments)	(289		)
Liability balance at December 31, 2014	$	182
Increase in liability (separation charges)	34
Reduction in liability (payments and other adjustments)	(87		)
Liability balance at March 31, 2015	$	129

The remaining liability balance as of March 31, 2015 represents costs for employees who have either not yet separated from the Company or whose full severance has not yet been paid. The majority of these remaining costs are expected to be paid in 2015.

In December 2013, we announced a restructuring plan for our Gosselies, Belgium, facility. This restructuring plan was 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 includes 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. In 2014, we recognized $273 million of these separation-related charges. For the three months ended March 31, 2015, we recognized $7 million of employee separation costs relating to this restructuring plan. The remaining costs are expected to be recognized in 2015.