1. Objective and Scope

1.1 Objective of this Operation

The aim of this operation is to guarantee the consistency of the figures within Balance Sheet and Income Statement.

1.2 Scope

All PF1 and WP1 impacted by Restructuring provisions.

2. Definitions

See Finance Glossary

3. Tasks description

Restructuring costs include:

• severance pay

• compensation for the early termination of operating leases, and

• all exit costs arising from restructurings, including impairment losses recognized on discontinued assets due to the closure of a site or operation.

They are recognized net of reductions in employee benefits already accrued, in case of loss of these benefits by employees.
Restructuring expenses of the period excluding depreciation (R45100)
These are actual restructuring expenses, which relate to existing provisions (made in previous periods).
Are included, the following expenses types:

• Staff costs and other social costs:

  • severance indemnities (for involuntary or voluntary leave)

  • indemnities for a previous notice not worked

  • leave reclassification

  • grants and aids in the creation of enterprises

  • outplacement costs

  • expertise costs of an audit firm

  • professional fees

  • etc...

• Charges (gains) associated with a shutdown (site, production unit, activity, commercial and administrative offices), causing the cessation of a going concern at the site level:

  • rent/lease and contract termination fees

  • destruction and restoration costs

  • gains from the sale of destruction materials (e.g.: scrap metal)

  • professional fees

Use of restructuring provisions (R45200)
This relates to the use (cash-out) made on restructuring provisions relating to period expenses (expenses reported under R45100).
Notes:

• R45200 should always correspond to the opposite amount posted on R45100.

• The corresponding heading of R45200 in the statement of financial position is "L45800 - short-term provisions for restructuring".

Restructuring provisions (R45300)
In here are reported the full charges of these provisions in the P/L (without cash counterpart):

• the new provisions (new measures). See above under R45100 for the related expenses types.

• The restructuring provisions are reviewed quarterly with the cost controllers.

Notes:

• The corresponding heading of R45300 in the statement of financial position is "L15800 / L45800 - long-term / short-term provisions for restructuring".

• Before reported new restructuring provisions, the agreement from the Consolidation Department is required in order to ensure these provisions relate well to a restructuring plan and not a recovery plan (competitive plan).

3.1. I verify the transaction types used in BS accounts

I verify if the transaction types used in the Balance Sheet accounts are the correct ones, in order to avoid any blocking Controls in BFC reporting tool.

For the Restructuring provisions, since they are non-recurrent provisions, the editable flows in BFC are:

F24 ALLOWANCE- NON RECUR

F37 W.BACK PROV NON REC.

F31 SHORT TERM TRANSFER

F50 RECLASSIFICATION

F70 SPECIAL-OP-MERGER

F98 PERIMETER OUTFLOW

Despite the SAP system accept other flows in the posting itself, the upload will not run successfully since BFC won't read nor assign the import to the correct headings.

By default and in case the postings are no related to corrections, all credits in the BS accounts for Restructuring are to be considered as allowances while debits write-backs. Debits if related to true expenses should also be debits in the BS accounts 4004100000 or 4070100000.

3.2. I verify posting schemes and nature of flows

I verify the posting schemes and nature of flows in order to avoid blocking controls in BFC reporting tool and also to ensure consistency between Balance Sheet and Income Statement.

Creation or increase of the provisions

When a new provision is created or when an existing one needs to be increased, the posting scheme will be
40 P&L account  within R45300 - no transaction type;
50 BS account with L15800/L45800 - transaction type F24

The accounts used must be chosen according to the type of provision.

Use of the provisions

All expenses (with origin in various processes) related to restructuring provisions must be posted on Restructuring Cost Center (Organizational Cost Center) throughout the month. Postings on the Restructuring Cost Center must be performed until D1 the latest.

The cashouts are to be booked in the restructuring cost center as debit movements. When the charges are reflected in the Balance Sheet accounts, the movement must be the same, debits (posting key 40).

• • Settlement rule of the cash-out orders → B/S Account for X0810

    • WP1: G/L account 45800300 Provision Restructuring ST

    • PF1: G/L account 4004100000 Provision Restructuring ST

  • Settlement rule for the cashout orders - B/S Account for X0820

    • WP1: G/L account 45800400 PROVISION RESTRUCTURING LOSSES ST

    • PF1: G/L account 4070100000 Provisions for reorganiz and closing down-ST

The cash out is booked on the Short Term account.

Check the consistency of the P&L.
R45100 and R45200 must have the same amount but with opposite sign as shown in the image below:

Transfer between Long Term and Short Term

When a transfer between the long term accounts and short term accounts is needed, the posting scheme should be the following:

No P&L impact. Modification from 407000000 to 4004100000

The accounts used must be chosen according to the type of provision.

Write back (decrease) of the provision

The decrease must be registered with specific transaction type in SAP F37. Reversal documents are not considered decreases.

3.3. I verify the site code used in the postings

I verify that the postings made against the Restructuring provision accounts (available in the set of accounts GS03 L15800/L45800/X0810/X0820) all have field Reference Key 3 filled in with valid information. The Reference Key 3 represents the year of the plan and the plan itself. This information is crucial to the successful upload to BFC reporting tool.

The Restructuring provision accounts are labelled as :

PF1: GENB (General TTY+REF 3 mandatory) in FSS0 transaction;

WP1: ZZ03 GL accounts (TT mandatory XREF3 mandat) in FSS0 transaction

Mandatory Reference key 3 = BFC code plan (external order N° field) + year

RYYYY/PPPPP: where YYYY = year of the plan and PPPPPP= plan code BFC

To manage the acceptable entries on this field, in case of need the following tables should be revisited: ZZF_CALA_SITE and, if necessary, ZZF_BFC_SITE.

Enter SM30 and select ZZF_CALA_SITE (both PF1 and WP1)

In case the restructuring plan is not included in this list, you should add an entry with the following information:

• • BFC site
  • Company code
  • Valid to: 31.12.9999
  • Valid from (the year must match the year of the Ref Key 3 result)

ZZF_CALA_SITE table is maintained by MAC Data Management team while creation of new restructuring cost centers.

If, by any chance, updating this table doesn't allow to insert the Reference Key 3 advised, please consider checking also ZZF_BFC_SITE. If the Plan is not insert as SR type (Site Restructuring), open a DMR request to have the plan available.

In case another GL account is defined to receive in Balance Sheet the settlement of the internal order, set of accounts GS03 Z_HKONT_IO_SETTL must be updated with the relevant account.

WP1

Following this, since Restructuring accounts masterdata may be defined as ZZ03/GENB, for the settlement of the order to read the External Order no (Reference Key 3, it is necessary to update set of accounts GS03 Z-ENV-STPROVACCT.

End of document.