Employee Separation Charges

9 Months Ended

Sep. 30, 2016

Restructuring and Related Activities [Abstract]

Employee Separation Charges

Employee Separation Charges

Our accounting for employee separations is dependent upon how the particular program is designed. For voluntary programs, eligible separation costs are recognized at the time of employee acceptance unless the acceptance requires explicit approval by the Company. For involuntary programs, eligible costs are recognized when management has approved the program, the affected employees have been properly notified and the costs are estimable.

In September 2015, Caterpillar Inc. announced restructuring and cost reduction actions to lower operating costs in response to weak economic and business conditions. As part of the announcement, we offered a voluntary retirement enhancement program to qualifying U.S. employees. For the year-ended December 31, 2015, we recognized employee separation charges of $15 million, which is included in Other expenses in the Consolidated Statements of Profit, primarily related to the voluntary retirement enhancement program. The following table summarizes the 2015 and 2016 separation activity:

(Millions of dollars)
Liability balance at December 31, 2014	$	—
Increase in liability (separation charges)	15
Reduction in liability (payments)	(5		)
Liability balance at December 31, 2015	$	10
Increase in liability (separation charges)	—
Reduction in liability (payments)	(10		)
Liability balance at September 30, 2016	$	—