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Notes to Consolidated Financial Statements
(in millions, except per-share data and where otherwise noted)
82
Severance and Lease Cancellation Asset
Related Costs and Other Costs Impairments (1) Total
Balance at December 31, 2009 $ 54 $ 20 $ – $ 74
Restructuring provision 470 28 26 524
Reversals of prior accruals (32) (9) – (41)
Net current period charges (2) 438 19 26 483
Charges against reserve and currency (194) (14) (26) (234)
Balance at December 31, 2010 298 25 – 323
Restructuring provision 98 1 5 104
Reversals of prior accruals (65) (6) – (71)
Net current period charges (2) 33 (5) 5 33
Charges against reserve and currency (215) (13) (5) (233)
Balance at December 31, 2011 116 7 – 123
Restructuring provision 160 5 2 167
Reversals of prior accruals (13) – (1) (14)
Net current period charges (2) 147 5 1 153
Charges against reserve and currency (140) (5) (1) (146)
Balance at December 31, 2012 $ 123 $ 7 $ – $ 130
(1) Charges associated with asset impairments represent the write-down of the related assets to their new cost basis and are recorded concurrently with the recognition of the provision.
(2) Represents amount recognized within the Consolidated Statements of Income for the years shown.
Note 10 – Restructuring and Asset
Impairment Charges
Over the past several years, we have engaged in a series of
restructuring programs related to downsizing our employee base,
exiting certain activities, outsourcing certain internal functions and
engaging in other actions designed to reduce our cost structure and
improve productivity. These initiatives primarily consist of severance
actions and impact all major geographies and segments. Management
continues to evaluate our business, therefore, in future years, there may
be additional provisions for new plan initiatives as well as changes in
previously recorded estimates, as payments are made or actions are
completed. Asset impairment charges were also incurred in connection
with these restructuring actions for those assets sold, abandoned or
made obsolete as a result of these programs.
Costs associated with restructuring, including employee severance
and lease termination costs are generally recognized when it has been
determined that a liability has been incurred, which is generally upon
communication to the affected employees or exit from the leased
facility, respectively. In those geographies where we have either a
formal severance plan or a history of consistently providing severance
benefits representing a substantive plan, we recognize employee
severance costs when they are both probable and reasonably
estimable.
A summary of our restructuring program activity during the three years
ended December 31, 2012 is as follows: