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Restructuring and Other Charges, Net | 9 Months Ended
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Sep. 29, 2013
Restructuring and Other Charges, Net |
Restructuring and Other Charges, Net | 5. Restructuring and Other Charges, Net The Company’s Board of Directors approves all major restructuring programs that involve the discontinuance of product lines or the shutdown of facilities. From time to time, the Company takes additional restructuring actions, including involuntary terminations that are not part of a major program. The Company accounts for these costs in the period that the individual employees are notified or the liability is incurred. These costs are included in restructuring and other charges in the Company’s consolidated statements of operations. On July 30, 2013, the Board of Directors authorized the initiation of a restructuring program with respect to our European operations to reduce our European manufacturing footprint by approximately 10%, improve organizational and operational efficiency and better align costs with expected revenues in response to changing market conditions. The restructuring program (‘2013 Actions’) is expected to include a pre-tax charge to earnings totaling approximately $14.0 million, approximately $9.8 million of which is expected to be recorded through fiscal 2014 and the remainder of which is expected to be recorded during fiscal 2015. This total charge is expected to include costs for severance benefits, relocation, clean-up, professional fees and certain asset write-downs. The total net after-tax charge for the restructuring program is expected to be approximately $10.0 million. The restructuring program is expected to be completed by the end of the fourth quarter of fiscal 2015. Certain aspects of the restructuring program are subject to further analysis and determinations by local management and consultation and negotiation with various workers’ councils. The Company also periodically initiates other actions which are not part of a major program. In 2011, 2012 and the first nine months of 2013, the Company initiated restructuring activities in Europe and North America to relocate certain manufacturing activities. Total expected costs are $4.4 million, including severance and relocation costs. The net after tax charge of $3.1 million will be incurred through mid-2014. A summary of the pre-tax cost by restructuring program is as follows:
|  | Third Quarter Ended |  | Nine Months Ended |
|  | September 29, 2013 |  | September 30, 2012 |  | September 29, 2013 |  | September 30, 2012 |
|  | (in millions) |
Restructuring costs: |  |  |  |  |  |  |  |  |
2011 Actions |  | $ | — |  | $ | — |  | $ | — |  | $ | 0.6 |
2013 Actions |  | 2.5 |  | — |  | 3.1 |  | — |
Other Actions |  | 0.3 |  | 0.5 |  | 3.9 |  | 2.2 |
Total restructuring charges |  | 2.8 |  | 0.5 |  | 7.0 |  | 2.8 |
Adjustment related to contingent liability reduction |  | — |  | (1.0 | ) | — |  | (1.0 | )
Total restructuring and other charges, net |  | $ | 2.8 |  | $ | (0.5 | ) | $ | 7.0 |  | $ | 1.8 |
The Company recorded pre-tax restructuring and other charges, net in its business segments as follows:
|  | Third Quarter Ended |  | Nine Months Ended |
|  | September 29, 2013 |  | September 30, 2012 |  | September 29, 2013 |  | September 30, 2012 |
|  | (in millions) |
North America |  | $ | — |  | $ | (0.8 | ) | $ | 0.3 |  | $ | 0.1 |
EMEA |  | 2.8 |  | 0.3 |  | 6.7 |  | 1.7 |
Total |  | $ | 2.8 |  | $ | (0.5 | ) | $ | 7.0 |  | $ | 1.8 |
Adjustment to gain on disposal of business. During the quarter ended September 30, 2012, the Company recorded a charge of $1.6 million related to an adjustment to the gain on disposal of Tianjin Watts Valve Company Ltd. (TWVC) within the Asia segment. In 2011, the Company had sold its equity ownership and remaining assets of TWVC and recognized a net pre-tax gain of $7.7 million and an after-tax gain of approximately $11.4 million relating mainly to the recognition of a cumulative translation adjustment and a tax benefit related to the reversal of a tax claw back in China. This gain was adjusted in 2012. 2013 Actions Details of the Company’s 2013 European footprint program reserve, which for the nine months ended September 29, 2013 only relates to severance, is as follows:
|  | Nine Months Ended |
|  | September, 2013 |
|  | (in millions) |
Balance at March 31, 2013 |  | $ | — |
Net pre-tax restructuring charges |  | 0.6 |
Utilization and foreign currency impact |  | (0.3 | )
Balance at June 30, 2013 |  | $ | 0.3 |
Net pre-tax restructuring charges |  | 2.5 |
Utilization and foreign currency impact |  | (0.8 | )
Balance at September 29, 2013 |  | $ | 2.0 |
The following table summarizes total expected, incurred and remaining pre-tax costs for 2013 European footprint program actions by type, and all attributable to the EMEA reportable segment:
|  | Severance |  | Legal and consultancy |  | Asset write-downs |  | Facility exit and other |  | Total |
|  | (in millions) |
Expected costs |  | $ | 12.0 |  | $ | 1.6 |  | $ | 0.2 |  | $ | 0.2 |  | $ | 14.0 |
Costs incurred—second quarter 2013 |  | (0.6 | ) | — |  | — |  | — |  | (0.6 | )
Costs incurred—third quarter 2013 |  | (2.5 | ) | — |  | — |  | — |  | (2.5 | )
Remaining costs at September 29, 2013 |  | $ | 8.9 |  | $ | 1.6 |  | $ | 0.2 |  | $ | 0.2 |  | $ | 10.9 |

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 146 -Paragraph 20 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 5.P.4) -URI http://asc.fasb.org/extlink&oid=6394695&loc=d3e140904-122747 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 5.P.3) -URI http://asc.fasb.org/extlink&oid=6394695&loc=d3e140864-122747 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 5 -Section P -Subsection 3, 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 + Details
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