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REPOSITIONING AND OTHER CHARGES
12 Months Ended
Dec. 31, 2012
Repositioning And Other Charges [Abstract]  
Repositioning and Other Charges

Note 3. Repositioning and Other Charges

 A summary of repositioning and other charges follows:
    
  Years Ended December 31, 
   2012  2011  2010 
Severance$91 $246 $144 
Asset impairments 12  86  21 
Exit costs 16  48  14 
Reserve adjustments (66)  (26)  (30) 
  Total net repositioning charge 53  354  149 
          
          
Asbestos related litigation charges, net of insurance 156  149  175 
Probable and reasonably estimable environmental liabilities 234  240  212 
Other 0  0  62 
          
  Total net repositioning and other charges$443$743$ 598

The following table summarizes the pretax distribution of total net repositioning and other charges by income statement classification:
     
  Years Ended December 31,  
  2012  2011  2010  
Cost of products and services sold$428 $646 $558  
Selling, general and administrative expenses 15  97  40  
 $443 $743 $598  
           

The following table summarizes the pretax impact of total net repositioning and other charges by segment:
    
  Years Ended December 31, 
  2012  2011  2010 
Aerospace$ (5) $29 $ 32 
Automation and Control Solutions  18   191   79 
Performance Materials and Technologies  12   41   18 
Transportation Systems  197   228   178 
Corporate  221   254   291 
 $ 443 $ 743 $ 598 

In 2012, we recognized repositioning charges totaling $119 million including severance costs of $91 million related to workforce reductions of 2,204 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 productivity and ongoing functional transformation initiatives. The repositioning charge also included asset impairments of $12 million principally related to manufacturing plant and equipment associated with the exit of a product line in our Performance Materials and Technologies segment. The repositioning charge also included exit costs of $16 million principally related to closure obligations associated with the planned shutdown of a manufacturing facility in our Transportation Systems segment and exit from a product line in our Performance Materials and Technologies segment. Also, $66 million of previously established accruals primarily for severance at our Automation and Control Solutions, Aerospace and Performance Materials and Technologies segments were returned to income in 2012 due primarily to fewer employee severance actions caused by higher attrition than originally planned associated with prior severance programs and changes in the scope of previously announced repositioning actions.

 

In 2011, we recognized repositioning charges totaling $380 million including severance costs of $246 million related to workforce reductions of 3,188 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, cost savings actions taken in connection with our ongoing functional transformation and productivity initiatives, factory transitions in connection with acquisition-related synergies in our Automation and Control Solutions and Aerospace segments, the exit from and/or rationalization of certain product lines and markets in our Performance Materials and Technologies and Automation and Control Solutions segments, the consolidation of repair facilities in our Aerospace segment, and factory consolidations and/or rationalizations and organizational realignments of businesses in our Automation and Control Solutions segment. The repositioning charges included asset impairments of $86 million principally related to the write-off of certain intangible assets in our Automation and Control Solutions segment due to a change in branding strategy and manufacturing plant and equipment associated with the planned shutdown of a manufacturing facility and the exit of a product line and a factory transition as discussed above. The repositioning charges also included exit costs of $48 million principally for costs to terminate contracts related to the exit of a market and product line and a factory transition as discussed above. Exit costs also included closure obligations associated with the planned shutdown of a manufacturing facility and exit of a product line also as discussed above. Also, $26 million of previously established accruals, primarily for severance at our Aerospace and Automation and Control Solutions segments, were returned to income in 2011 due principally to fewer employee separations than originally planned associated with prior severance programs.

 

In 2010, we recognized repositioning charges totaling $179 million including severance costs of $144 million related to workforce reductions of 2,781 manufacturing and administrative positions primarily in our Automation and Control Solutions, Aerospace and Transportation Systems segments. The workforce reductions were primarily related to the planned shutdown of certain manufacturing facilities in our Automation and Control Solutions and Transportation Systems segments, cost savings actions taken in connection with our ongoing functional transformation and productivity initiatives, factory transitions in our Aerospace, Automation and Control Solutions and Performance Materials and Technologies segments to more cost-effective locations, achieving acquisition-related synergies in our Automation and Control Solutions segment, and the exit and/or rationalization of certain product lines in our Performance Materials and Technologies segment. The repositioning charge also included asset impairments of $21 million principally related to manufacturing plant and equipment associated with the exit and/or rationalization of certain product lines and in facilities scheduled to close. Also, $30 million of previously established accruals, primarily for severance at our Automation and Control Solutions, Transportation Systems and Aerospace segments, were returned to income in 2010 due to fewer employee separations than originally planned associated with prior severance programs.

 

       The following table summarizes the status of our total repositioning reserves:

   Severance  Asset  Exit    
   Costs  Impairments  Costs  Total 
Balance at December 31, 2009$ 294 $ - $ 37 $ 331 
 2010 charges  144   21   14   179 
 2010 usage - cash  (130)   -   (17)   (147) 
 2010 usage - noncash  -   (21)   -   (21) 
 Adjustments  (30)   -   -   (30) 
 Foreign currency translation  (8)   -   -   (8) 
Balance at December 31, 2010  270   -   34   304 
 2011 charges  246   86   48   380 
 2011 usage - cash  (136)   -   (23)   (159) 
 2011 usage - noncash  -   (86)   -   (86) 
 Adjustments  (26)   -   -   (26) 
 Foreign currency translation  (1)   -   -   (1) 
Balance at December 31, 2011  353   -   59   412 
 2012 charges  91   12   16   119 
 2012 usage - cash  (113)   -   (23)   (136) 
 2012 usage - noncash  -   (12)   -   (12) 
 Adjustments  (61)   -   (5)   (66) 
 Foreign currency translation  6   -   -   6 
Balance at December 31, 2012$ 276 $ - $ 47 $ 323 
              

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 Transportation  
2011 Repositioning Actions Aerospace Control Solutions Systems Total
Expected exit and disposal costs$ 15$ 15$ 7$ 37
Costs incurred during:        
 Year ended December 31, 2011  (1)  -  -  (1)
 Year ended December 31, 2012  (2)  (3)  (1)  (6)
Remaining exit and disposal costs at        
 December 31, 2012$12$12$6$ 30
          
          
     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)
 Year ended December 31, 2012  (1)  (1)  (1)  (3)
Remaining exit and disposal costs at        
 December 31, 2012$ 8$ 6$ -$ 14

In 2012, we recognized a charge of $234 million for environmental liabilities deemed probable and reasonably estimable during the year. We recognized asbestos related litigation charges, net of insurance, of $156 million. Environmental and Asbestos matters are discussed in detail in Note 22 Commitments and Contingencies of Notes to the Financial Statements.

In 2011, we recognized a charge of $240 million for environmental liabilities deemed probable and reasonably estimable during the year. We recognized asbestos related litigation charges, net of insurance, of $149 million.

In 2010, we recognized a charge of $212 million for environmental liabilities deemed probable and reasonably estimable during the year. We recognized asbestos related litigation charges, net of insurance, of $175 million. We also recognized other charges of $62 million in connection with the evaluation of potential resolution of certain legal matters.