Note 22 Restructuring and related expenses

White Collar Productivity program

In September 2015, the Company announced a two-year program aimed at making the Company leaner, faster and more customer-focused. Planned productivity improvements include the rapid expansion and use of regional shared service centers as well as the streamlining of global operations and head office functions, with business units moving closer to their respective key markets. In the course of this program, the Company will implement and execute various restructuring initiatives across all operating segments and regions.

The following table outlines the cumulative costs incurred to date and the total amount of costs expected to be incurred under the program per operating segment:

($ in millions)

Cumulative costs incurred up to December 31, 2015

Total expected costs

Discrete Automation and Motion

45

169

Low Voltage Products

60

126

Process Automation

91

137

Power Products

42

155

Power Systems

46

82

Corporate and Other

86

183

Total

370

852

Of the total expected costs of $852 million the majority is related to employee severance costs.

The Company recorded the following expenses under this program:

($ in millions)

2015

Employee severance costs

364

Estimated contract settlement, loss order and other costs

5

Inventory and long-lived asset impairments

1

Total

370

Expenses associated with this program are recorded in the following line items in the Consolidated Income Statements:

($ in millions)

2015

Total cost of sales

122

Selling, general and administrative expenses

187

Non-order related research and development expenses

38

Other income (expense), net

23

Total

370

Liabilities associated with the White Collar Productivity program, are primarily included in “Other provisions”. The following table shows the activity during 2015 by expense type:

($ in millions)

Employee severance costs

Contract settlement, loss order and other costs

Total

Liability at January 1, 2015

Expenses

364

5

369

Cash payments

(34)

(1)

(35)

Liability at December 31, 2015

330

4

334

Other restructuring-related activities

In addition, in 2015, 2014 and 2013, the Company executed various other minor restructuring-related activities and incurred charges of $256 million, $235 million and $252 million, respectively, which were mainly recorded in “Total cost of sales”.

($ in millions)

2015

2014

2013

Employee severance costs

207

177

154

Estimated contract settlement, loss order and other costs

27

31

78

Inventory and long-lived asset impairments

22

27

20

Total

256

235

252

At December 31, 2015 and 2014, the balance of other restructuring-related liabilities is primarily included in “Other provisions”.