2003 Restructuring program
In June 2003, Metso announced an efficiency improvement program affecting all business areas. The program was designed to cut overhead costs aiming to achieve substantial cost savings. The plan included streamlining of sales and administrative organizations and closing down plants to reduce excess production capacity. The personnel cuts resulted in a reduction of some 2,000 persons both through involuntary terminations and through disposals and outsourcing solutions. The program, which amounted to €93 million, was finalized in 2004.
Under U.S. GAAP, a liability for a cost associated with an exit or disposal activity is measured at fair value and recognized when the liability is incurred. These costs include, but are not limited to, one-time benefits provided to current employees, who are involuntarily terminated, and costs to terminate contracts, other than capital leases. If employees are required to render service until they are terminated in order to receive the termination benefits, the cost under U.S. GAAP is recognized ratably over the future service period. Under IFRS, a provision for the full termination benefit cost is recognized in the period in which the Company becomes legally or constructively committed to a plan.
2004 Restructuring program
In 2004, Metso decided on a program for renewal of Metso Paper’s business concept with the aim to streamline the cost structure. The main locations affected by the program are operations in Finland, Sweden and in North America. The measures included personnel reductions in production and administration, disposals of non-core sites and reorganization of the tissue business line. The program, which amounted to €31 million, was finalized in 2005.
There are no differences in the restructuring accruals between IFRS and US GAAP in 2006.