Restructuring and Other Charges

Over the past several years, we have adopted plans to restructure portions of our operations. These plans were approved by our Board of Directors and were designed to reduce operational and administrative overhead costs throughout the business. In 2013, we incurred $78 million in restructuring and related costs, primarily related to European cost reduction efforts including non-cash asset write downs of $3 million, the costs to exit the distribution of aftermarket exhaust products and ending production of leaf springs in Australia, headcount reductions in various regions and the net impact of freezing our defined benefit plans in the United Kingdom, of which $70 million was recorded in cost of sales, $6 million in SG&A, $1 million in engineering expense and $1 million in other expense. In the third quarter of 2014, we incurred $8 million in restructuring and related costs including non-cash charges of $2 million, primarily related to European cost reduction efforts, headcount reductions in Australia and the sale of a closed facility in Cozad, Nebraska, of which $5 million was recorded in cost of sales and $3 million in other expense. In the third quarter of 2013, we incurred $58 million in restructuring and related costs primarily related to European cost reduction efforts including non-cash asset write downs of $2 million and headcount reductions in various regions, of which $56 million was recorded in cost of sales, $1 million in SG&A and $1 million in other expense. In the first nine months of 2014, we incurred $28 million in restructuring and related costs including non-cash charges of $3 million, primarily related to European cost reduction efforts, headcount reductions in Australia and South America and the sale of a closed facility in Cozad, Nebraska, of which $20 million was recorded in cost of sales, $3 million in SG&A , $1 million in engineering expense and $4 million in other expense. In the first nine months of 2013, we incurred $69 million in restructuring and related costs primarily related to European cost reduction efforts including non-cash asset write downs of $2 million, the costs to exit the distribution of aftermarket exhaust products and ending of production of leaf springs in Australia, headcount reductions in various regions, and the net impact of freezing our defined benefit plans in the United Kingdom, of which $63 million was recorded in cost of sales, $5 million in SG&A and $1 million in other expense.

Amounts related to activities that are part of our restructuring reserves are as follows:



	December 31, 2013 Restructuring Reserve		2014 Expenses	2014 Cash Payments		Impact of Exchange Rates		September 30, 2014 Restructuring Reserve
	(Millions)
Employee Severance, Termination Benefits and Other Related Costs		$44	25	(32	)	(3	)		$34

Under the terms of our amended and restated senior credit agreement that took effect on March 22, 2012, we are allowed to exclude $80 million of cash charges and expenses, before taxes, related to cost reduction initiatives incurred after March 22, 2012 from the calculation of the financial covenant ratios required under our senior credit facility. As of December 31, 2013, we had excluded the entire $80 million of allowable charges relating to restructuring initiatives.

On January 31, 2013, we announced our intent to reduce structural costs in Europe. This initiative includes the closing of the Vittaryd facility in Sweden that we announced in September 2012 and a $7 million charge recorded in the fourth quarter of 2012 related to the impairment of certain assets in the European ride performance business. As part of our European structural cost reduction initiative, on September 5, 2013 we announced our intent to close our ride performance plant in Gijon, Spain and reduce the workforce at our ride performance plant in Sint-Truiden, Belgium. The actions were subject to consultation with the relevant employee representatives. We incurred $78 million in restructuring and related costs in 2013, of which $69 million was related to this initiative including $3 million non-cash asset write downs. In the third quarter of 2014, we incurred $8 million in restructuring and related costs, of which $4 million was related to this initiative. In the first nine months of 2014, we incurred $28 million in restructuring and related costs, of which $18 million was related to this initiative including $1 million for non-cash asset write downs. We concluded the consultation period with employee representatives at Gijon without having reached agreement and on December 17, 2013 notified the Gijon employees' works council that the Company was proceeding with the plant closure. Employee terminations at Gijon were completed by the end of 2013. During the first quarter of 2014, the employees' works council filed suit challenging the decision to close the Gijon plant and local High Court of Justice of Asturias ruled in favor of the employees' works council. On February 25, 2014, we announced the intention of the Company to appeal that decision to the Supreme Court of Spain in Madrid, and at the same time we worked closely with local and European government officials to reach a solution to address the challenge to our restructuring plan by the Gijon plant's employees' works council. In July 2014, we finalized the agreements related to the restructuring with employee representatives at Gijon as well as Sint-Truiden. Under the final agreement for Gijon, the plant re-opened in July 2014 with about half of its prior workforce and will continue to be operated by Tenneco until a complete transfer of ownership takes place in approximately two years. In the first quarter of 2014, we announced and finalized the closure of the clean air just-in-time plant in Iwuy, France, due to reduced demand for the plant's products. The actions were subject to the required consultation process with the relevant employee representatives.