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REPOSITIONING AND OTHER CHARGES
3 Months Ended
Mar. 31, 2012
Repositioning And Other Charges [Abstract]  
REPOSITIONING AND OTHER CHARGES

Note 4. Repositioning and Other Charges

 A summary of repositioning and other charges follows:      
         
    Three Months Ended 
    March 31, 
    2012  2011 
 Severance$15 $27 
 Asset impairments 9  10 
 Exit costs 8  11 
 Adjustments (7)  (4) 
  Total net repositioning charge 25  44 
        
 Asbestos related litigation charges, net of insurance 36  38 
 Probable and reasonably estimable environmental liabilities 61  51 
        
  Total net repositioning and other charges$122$133

The following table summarizes the pretax distribution of total net repositioning and other charges by income statement classification:
     
   Three Months Ended 
   March 31, 
   2012  2011 
 Cost of products and services sold$ 119 $ 118 
 Selling, general and administrative expenses  3   15 
  $ 122 $ 133 
        

The following table summarizes the pretax impact of total net repositioning and other charges by segment:
        
   Three Months Ended 
   March 31, 
   2012  2011 
 Aerospace$ 1 $ - 
 Automation and Control Solutions  (1)   33 
 Performance Materials and Technologies  14   13 
 Transportation Systems  52   36 
 Corporate  56   51 
  $ 122 $ 133 
        

In the quarter ended March 31, 2012, we recognized repositioning charges totaling $ 32 million including severance costs of $ 15 million related to workforce reductions of 618 manufacturing and administrative positions across all of our segments. The workforce reductions were primarily related to the planned shutdown of a manufacturing facility in our Transportation Systems segment, the exit from a product line in our Performance Materials and Technologies segment, and cost savings actions taken in connection with our ongoing functional transformation and productivity initiatives. The repositioning charge included asset impairments of $ 9 million principally related to manufacturing plant and equipment associated with the exit from a product line in our Performance Materials and Technologies segment. The repositioning charge also included exit costs of $ 8 million related to closure obligations associated with the planned shutdown of a manufacturing facility and exit of a product line as discussed above. Also, $7 million of previously established accruals for severance in our Automation and Control Solutions segment were returned to income in the first quarter of 2012 due primarily to fewer employee separations than originally planned associated with prior severance programs.

In the quarter ended March 31, 2011 we recognized repositioning charges totaling $ 48 million including severance costs of $ 27 million related to workforce reductions of 586 manufacturing and administrative positions in our Automation and Control Solutions and Performance Materials and Technologies segments. The workforce reductions were related to factory transitions in connection with acquisition-related synergies in our Automation and Control Solutions segment, the exit from and/or rationalization of certain product lines and markets in our Performance Materials and Technologies and Automation and Control Solutions segments, and an organizational realignment of a business in our Automation and Control Solutions segment. The repositioning charge included asset impairments of $ 10 million principally related to manufacturing plant and equipment associated with the exit of a product line and a factory transition as discussed above. The repositioning charge also included exit costs of $ 11 million principally for costs to terminate contracts, including an operating lease, related to the exit of a market and a factory transition as discussed above.

 

 The following table summarizes the status of our total repositioning reserves:  
           
   Severance Asset Exit   
     Costs   Impairments Costs Total 
           
 December 31, 2011$ 353$ -$ 59$ 412 
  Charges  15  9  8  32 
  Usage - cash  (36)  -  (11)  (47) 
  Usage - noncash  -  (9)  -  (9) 
  Foreign currency translation  (1)  -  -  (1) 
  Adjustments  (7)  -  -  (7) 
           
 March 31, 2012$ 324$ -$ 56$ 380 

Certain repositioning projects in our Aerospace, Automation and Control Solutions and Transportation Systems segments included exit or disposal activities, the costs related to which will be recognized in future periods when the actual liability is incurred. The nature of these exit or disposal costs includes asset set-up and moving, product recertification and requalification, and employee retention, training and travel. The following tables summarize by segment, expected, incurred and remaining exit and disposal costs related to 2011 and 2010 repositioning actions which we were not able to recognize at the time the actions were initiated. The exit and disposal costs related to the repositioning actions in 2012 which we were not able to recognize at the time the actions were initiated were not significant.

 

    Automation    
    and Control Transportation  
2011 Repositioning Actions Aerospace Solutions Systems Total
         
Expected exit and disposal costs$ 15$ 15$ 7$ 37
Costs incurred during        
Year ended December 31, 2011  (1)  -  -  (1)
Current year-to-date  -  -  -  -
         
Remaining exit and disposal        
costs at March 31, 2012$14$15$7$36

         
    Automation and Transportation   
2010 Repositioning Actions Aerospace Control Solutions Systems Total
         
Expected exit and disposal costs$ 11$ 10$ 2$ 23
Costs incurred during        
Year ended December 31, 2010  -  -  -  -
Year ended December 31, 2011  (2)  (3)  (1)  (6)
Current year-to-date  -  -  (1)  (1)
         
Remaining exit and disposal        
costs at March 31, 2012$ 9$ 7$ -$ 16

In the quarter ended March 31, 2012, we recognized a charge of $ 61 million for environmental liabilities deemed probable and reasonably estimable in the quarter. We also recognized a charge of $ 36 million primarily representing an update to our estimated liability for the resolution of Bendix related asbestos claims as of March 31, 2012, net of probable insurance recoveries. Environmental and Asbestos matters are discussed in detail in Note 15, Commitments and Contingencies.

 

In the quarter ended March 31, 2011, we recognized a charge of $ 51 million for environmental liabilities deemed probable and reasonably estimable in the quarter. We also recognized a charge of $ 38 million primarily representing an update to our estimated liability for the resolution of Bendix related asbestos claims as of March 31, 2011, net of probable insurance recoveries.