Restructuring Accruals

9 Months Ended

Sep. 30, 2011

Restructuring Accruals

Restructuring Accruals

9.  Restructuring Accruals

Beginning in 2007, the Company commenced a strategic review of its global profitability and manufacturing footprint.  The Company concluded its global review as of December 31, 2009, with the final actions implemented in the first half of 2010.  Amounts recorded by the Company do not include any future gains that may be realized upon the ultimate sale or disposition of closed facilities.

The Company is currently formulating and implementing a restructuring plan in its Asia Pacific segment to align its supply base with lower demand in Australia.  As part of this plan, the Company closed one machine line in the second quarter of 2011, and recorded $4 million of restructuring charges for related employee costs.  During the third quarter of 2011, the Company recorded charges of $22 million for employee costs and asset impairments as it closed one furnace in Australia during the quarter and plans to close one additional furnace in early 2012.  Further restructuring activities in Australia will depend on 2012 supply and demand trends and the outcome of contract negotiations.

The Company continually reviews its manufacturing footprint and may close various operations due to plant efficiencies, integration of acquisitions, and other market factors.  These restructuring actions taken by the Company are not related to the strategic review of manufacturing operations or the Australian restructuring plan discussed above.  As part of this continuing review of its manufacturing footprint, the Company recorded restructuring charges of $8 million in the first quarter of 2011 for employee costs related to a plant closing and the related relocation of business to other facilities in its Asia Pacific segment. In addition, the Company recorded restructuring charges of $6 million in the third quarter of 2011 related to headcount reductions, primarily in the South America segment.

The Company acquired VDL in the third quarter of 2011 (see Note 13).  As part of this acquisition, the Company assumed the severance liability of VDL related to a headcount reduction program initiated prior to the acquisition.

Selected information related to the restructuring accruals for the first nine months of 2011 and 2010 is as follows:

	Strategic Footprint Review												Other
	Employee Costs			Other			Total			Australia Restructuring			Restructuring Actions			Total Restructuring
Balance at January 1, 2011	$	27		$	25		$	52		$	—		$	27		$	79
First quarter 2011 charges													8			8
Net cash paid, principally severance and related benefits	(2		)	(2		)	(4		)							(4		)
Other, including foreign exchange translation	2						2									2
Balance at March 31, 2011	27			23			50			—			35			85
Second quarter 2011 charges										4						4
Net cash paid, principally severance and related benefits	(2		)				(2		)				(7		)	(9		)
Other, including foreign exchange translation							—						(2		)	(2		)
Balance at June 30, 2011	25			23			48			4			26			78
Third quarter 2011 charges										22			7			29
Write-down of assets to net realizable value										(10		)				(10		)
Net cash paid, principally severance and related benefits	(1		)	(1		)	(2		)	(10		)	(2		)	(14		)
Acquisition													11			11
Other, including foreign exchange translation	(1		)				(1		)				(2		)	(3		)
Balance at September 30, 2011	$	23		$	22		$	45		$	6		$	40		$	91
Balance at January 1, 2010	$	93		$	26		$	119		$	—		$	27		$	146
Net cash paid, principally severance and related benefits	(18		)	(1		)	(19		)							(19		)
Other, including foreign exchange translation	(1		)				(1		)							(1		)
Balance at March 31, 2010	74			25			99			—			27			126
Second quarter 2010 charges	(2		)	10			8									8
Write-down of assets to net realizable value				(1		)	(1		)							(1		)
Net cash paid, principally severance and related benefits	(9		)	(3		)	(12		)							(12		)
Other, including foreign exchange translation	(3		)	(1		)	(4		)							(4		)
Balance at June 30, 2010	60			30			90			—			27			117
Net cash paid, principally severance and related benefits	(12		)	(6		)	(18		)							(18		)
Other, including foreign exchange translation	2			1			3									3
Balance at September 30, 2010	$	50		$	25		$	75		$	—		$	27		$	102

The Company’s decisions to curtail selected production capacity have resulted in write downs of certain long-lived assets to the extent their carrying amounts exceeded fair value or fair value less cost to sell.  The Company classified the significant assumptions used to determine the fair value of the impaired assets, which was not material, as Level 3 in the fair value hierarchy as set forth in the general accounting principles for fair value measurements.

The Company also recorded liabilities for certain employee separation costs to be paid under contractual arrangements and other exit costs.