OTHER EXPENSE (INCOME)
The following table presents items included in other expense (income):
|
| | | | | | | | | | | |
| Year Ended December 31, |
(millions of dollars) | 2013 | | 2012 | | 2011 |
Restructuring expense | $ | 52.3 |
| | $ | 27.4 |
| | $ | — |
|
Program termination agreement | 11.3 |
| | — |
| | — |
|
Retirement related obligations | 5.9 |
| | 17.3 |
| | — |
|
Loss from disposal activities | — |
| | 39.7 |
| | 21.5 |
|
Patent infringement settlement, net of legal costs incurred | — |
| | — |
| | (29.1 | ) |
Other | (6.9 | ) | | 0.3 |
| | (0.5 | ) |
Other expense (income) | $ | 62.6 |
| | $ | 84.7 |
| | $ | (8.1 | ) |
During the fourth quarter of 2013, the Company recorded restructuring expense of $52.3 million primarily related to the initiation of Drivetrain segment actions designed to improve future profitability and competitiveness. Included in this restructuring expense are asset impairment expenses of $37.3 million, employee termination benefits of $10.4 million and $4.6 million of other expense. Asset impairment charges recorded in 2013 primarily relate to the write-down of machinery and equipment and intangible assets associated with the announced closure of certain European facilities within the Company's Drivetrain segment. The employee termination costs relate to approximately 300 employees primarily in Europe. It is expected the liability for these benefits will be paid out by the middle of 2015.
During the first quarter of 2013, the Company recorded an $11.3 million expense related to a program termination agreement, which was paid in the second and third quarters of 2013.
During the fourth quarter of 2012, the Company waived the forfeiture provision associated with future restricted stock grants made to certain retiring Named Executive Officers ("NEOs"). The Company recorded a $5.9 million retirement related obligation primarily related to a first quarter 2013 grant of restricted stock awards to these NEOs.
During the fourth quarter of 2012, the Company recorded retirement related obligations of $17.3 million comprised of a $5.7 million loss resulting from the settlement of a portion of the Muncie Plant's pension obligation and an $11.6 million expense associated with the retirement of certain NEOs. Refer to Notes 11 and 12 to the Consolidated Financial Statements for further information regarding the Muncie Plant's settlement loss and the Company's decision to waive the forfeiture provisions of existing restricted stock and performance share grants made to certain retiring NEOs.
During the second and third quarters of 2012, the Company incurred $39.7 million in expense associated with the loss on sale of the spark plug business, primarily related to the to write-down of prior purchase price accounting adjustments included within the disposal group. These purchase price accounting adjustments were originally reported in the Engine segment and related to the BERU acquisition. The Company also recorded restructuring expense of $27.4 million in the third quarter of 2012 primarily associated with the disposal and future requirements of BERU's on-going business, which included $9.0 million of employee termination benefits, $6.3 million of contract cancellation costs and $12.1 million of other charges, primarily related to the write-down of certain assets.
On May 16, 2011, BorgWarner and Honeywell settled a lawsuit resolving BorgWarner's patent infringement claims. As a result of the settlement, Honeywell paid $32.5 million for a paid up license to use the asserted BorgWarner patents. During 2011, the Company incurred $3.4 million in legal costs related to this lawsuit and after deducting these costs, the Company recorded a net gain of $29.1 million.
See Note 17 to the Consolidated Financial Statements for information regarding the Company's 2011 loss from disposal activities.
