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Special Charges, Net | 12 Months Ended
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Dec. 31, 2012
Special Charges, Net |
Special Charges, Net | (6) Special Charges, Net As part of our business strategy, we periodically right-size and consolidate operations to improve long-term results. Additionally, from time to time, we alter our business model to better serve customer demand, fix or discontinue lower-margin product lines and rationalize and consolidate manufacturing capacity. Our restructuring and integration decisions are based, in part, on discounted cash flows, and are designed to achieve our goals of increasing outsourcing, reducing structural footprint and maximizing profitability. As a result of our strategic review process, we recorded net special charges of $24.1 in 2012, $25.3 in 2011 and $30.7 in 2010. These net special charges were primarily for restructuring initiatives to consolidate manufacturing and sales facilities, reduce workforce, and rationalize certain product lines, as well as asset impairment charges. The components of the charges have been computed based on actual cash payouts, including severance and other employee benefits based on existing severance policies, local laws, and other estimated exit costs, and our estimate of the realizable value of the affected tangible and intangible assets. Impairments of long-lived assets, including amortizable intangibles, which represent non-cash asset write-downs, typically arise from business restructuring decisions that lead to the disposition of assets no longer required in the restructured business. For these situations, we recognize a loss when the carrying amount of an asset exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Fair values for assets subject to impairment testing are determined primarily by management, taking into consideration various factors including third-party appraisals, quoted market prices and previous experience. If an asset remains in service at the decision date, the asset is written down to its fair value and the resulting net book value is depreciated over its remaining economic useful life. When we commit to a plan to sell an asset, including the initiation of a plan to locate a buyer, and it is probable that the asset will be sold within one year based on its current condition and sales price, depreciation of the asset is discontinued and the asset is classified as an asset held for sale. The asset is written down to its fair value less any selling costs. Liabilities for exit costs, including, among other things, severance, other employee benefit costs, and operating lease obligations on idle facilities, are measured initially at their fair value and recorded when incurred. With the exception of certain multi-year operating lease obligations and other contractual obligations, which are not material to our consolidated financial statements, we anticipate that the liabilities related to restructuring actions will be paid within one year from the period in which the action was initiated. Special charges for the years ended December 31, 2012, 2011 and 2010 are described in more detail below and in the applicable sections that follow.
|  | 2012 |  | 2011 |  | 2010 |
--- | --- | --- | --- | --- | --- | --- | ---
Employee termination costs |  | $ | 22.5 |  | $ | 11.5 |  | $ | 18.4 |
Facility consolidation costs |  |  | 2.6 |  |  | 5.5 |  |  | 4.0 |
Other cash costs (recoveries), net |  |  | (4.4 | ) |  | 0.1 |  |  | 1.5 |
Non-cash asset write-downs |  |  | 3.4 |  |  | 8.2 |  |  | 6.8 |
Total |  | $ | 24.1 |  | $ | 25.3 |  | $ | 30.7 |
2012 Charges:
|  | Employee Termination Costs |  | Facility Consolidation Costs |  | Other Cash Costs (Recoveries), Net |  | Non-Cash Asset Write-downs |  | Total Special Charges |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Flow Technology reportable segment |  | $ | 16.2 |  | $ | 1.8 |  | $ | — |  | $ | 0.9 |  | $ | 18.9 |
Thermal Equipment and Services reportable segment |  |  | 5.7 |  |  | 0.2 |  |  | 0.1 |  |  | 1.6 |  |  | 7.6 |
Industrial Products and Services |  |  | (0.1 | ) |  | 0.5 |  |  | — |  |  | 0.6 |  |  | 1.0 |
Corporate |  |  | 0.7 |  |  | 0.1 |  |  | (4.5 | ) |  | 0.3 |  |  | (3.4 | )
Total |  | $ | 22.5 |  | $ | 2.6 |  | $ | (4.4 | ) | $ | 3.4 |  | $ | 24.1 |
Flow Technology reportable segment — Charges for 2012 related primarily to cost reduction initiatives for the segment's components business in Europe and at locations in Canada and Denmark, as well as costs associated with the relocation of the segment's America's Shared Service Center from Des Plaines, IL to Charlotte, NC, the integration of Clyde Union, and the reorganization of the segment's systems business, including asset impairment charges of $0.9. Once completed, these activities will have resulted in the termination of 319 employees. Thermal Equipment and Services reportable segment — Charges for 2012 related primarily to costs associated with restructuring initiatives at various locations in China and Europe, including asset impairment charges totaling $1.6, and severance costs associated with transferring certain functions of our boiler and heating products business to a location in Chicago, IL. These activities are expected to result in the termination of 195 employees. Industrial Products and Services — Charges for 2012 related primarily to asset impairment charges of $0.6. Corporate — Charges for 2012 included a gain of $4.8 on the sale of land rights in Shanghai, China, for which the related costs previously had been written-off. This gain was offset partially by costs associated with consolidating certain corporate functions and our legal entity reduction initiative. As it relates to plans approved as of December 31, 2012, expected charges still to be incurred are less than $1.0. 2011 Charges:
|  | Employee Termination Costs |  | Facility Consolidation Costs |  | Other Cash Costs |  | Non-Cash Asset Write-downs |  | Total Special Charges |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Flow Technology reportable segment |  | $ | 6.4 |  | $ | 4.1 |  | $ | — |  | $ | — |  | $ | 10.5 |
Thermal Equipment and Services reportable segment |  |  | 2.2 |  |  | 0.7 |  |  | — |  |  | — |  |  | 2.9 |
Industrial Products and Services |  |  | 2.6 |  |  | — |  |  | — |  |  | 1.7 |  |  | 4.3 |
Corporate |  |  | 0.3 |  |  | 0.7 |  |  | 0.1 |  |  | 6.5 |  |  | 7.6 |
Total |  | $ | 11.5 |  | $ | 5.5 |  | $ | 0.1 |  | $ | 8.2 |  | $ | 25.3 |
Flow Technology reportable segment — Charges for 2011 related primarily to headcount reductions at facilities in Germany and China, lease exit costs for facilities in Denmark, France and New Zealand, the continued integration of the Anhydro and Gerstenberg acquisitions, the reorganization of the segment's systems business, the transition of certain European back-office positions to the shared service center in Manchester, United Kingdom, and additional costs associated with restructuring activities initiated in 2010. These activities resulted in the termination of 133 employees. Thermal Equipment and Services reportable segment — Charges for 2011 related primarily to costs associated with headcount reductions at facilities in Germany and Italy and lease exit costs associated with two facilities in Germany. These activities resulted in the termination of 58 employees. Industrial Products and Services — Charges for 2011 related primarily to costs associated with headcount reductions at facilities in Raymond, ME and Franklin, TN, and asset impairment charges of $1.7. These activities resulted in the termination of 112 employees. Corporate — Charges for 2011 related primarily to our legal entity reduction initiative and asset impairment charges of $6.5 associated with our decision to postpone the construction of a manufacturing facility in Shanghai, China. 2010 Charges:
|  | Employee Termination Costs |  | Facility Consolidation Costs |  | Other Cash Costs |  | Non-Cash Asset Write-downs |  | Total Special Charges |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Flow Technology reportable segment |  | $ | 6.1 |  | $ | 3.0 |  | $ | 0.5 |  | $ | 2.1 |  | $ | 11.7 |
Thermal Equipment and Services reportable segment |  |  | 11.9 |  |  | — |  |  | 0.3 |  |  | 4.0 |  |  | 16.2 |
Industrial Products and Services |  |  | 0.4 |  |  | 0.1 |  |  | — |  |  | — |  |  | 0.5 |
Corporate |  |  | — |  |  | 0.9 |  |  | 0.7 |  |  | 0.7 |  |  | 2.3 |
Total |  | $ | 18.4 |  | $ | 4.0 |  | $ | 1.5 |  | $ | 6.8 |  | $ | 30.7 |
Flow Technology reportable segment — Charges for 2010 related primarily to headcount reduction costs at various facilities in Europe, lease exit costs for one facility in Australia and two facilities in New Zealand, additional costs associated with restructuring activities initiated in 2009, and asset impairment charges associated with an idle facility in Lake Mills, WI ($2.1 for 2010), as well as costs associated with the segment's regional reorganization, the movement of certain functions to the new European shared service center in Manchester, United Kingdom, and integration activities related to the Anhydro and Gerstenberg acquisitions. These activities resulted in the termination of 152 employees. Thermal Equipment and Services reportable segment — Charges for 2010 related primarily to costs associated with headcount reductions at facilities in Leipzig, Germany; Ratingen, Germany; Rothemuhle, Germany; Michigan City, IN; and Tulsa, OK. Additionally, charges for 2010 included asset impairment charges of $4.0. These activities resulted in the termination of 269 employees. Industrial Products and Services — Charges for 2010 related primarily to costs associated with headcount reductions at facilities in White Deer, PA and Rochester, NY. These activities resulted in the termination of 81 employees. Corporate — Charges for 2010 related primarily to asset impairment and facility exit charges of $1.1 and costs related to our legal entity reduction initiative. The following is an analysis of our restructuring and integration liabilities for the years ended December 31, 2012, 2011 and 2010:
|  | December 31, |
--- | --- | --- | ---
|  | 2012 |  | 2011 |  | 2010 |
Balance at beginning of year |  | $ | 11.0 |  | $ | 17.6 |  | $ | 19.5 |
Special charges — cash(1) |  |  | 25.5 |  |  | 17.1 |  |  | 23.9 |
Utilization — cash |  |  | (20.1 | ) |  | (23.4 | ) |  | (19.9 | )
Currency translation adjustment and other |  |  | — |  |  | (0.3 | ) |  | (5.9 | )
Ending balance |  | $ | 16.4 |  | $ | 11.0 |  | $ | 17.6 |
(1) The years ended December 31, 2012, 2011 and 2010 exclude $3.4, $8.2 and $6.8, respectively, of non-cash special charges that impact special charges but not the restructuring and integration related liabilities, as well as a gain of $4.8 on the sale of land rights in Shanghai, China.

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- Definition The entire disclosure for aggregate costs incurred during the period for restructuring, remediation, implementation, integration and asset impairment activities. Description of restructuring activities such as exit and disposal activities, could 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. This would also include disclosure of the charge against earnings resulting from the aggregate write down of all assets from their carrying value to their fair value. + References No definition available. + Details
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