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. For the full year 2016, we incurred $36 million in restructuring and related costs including asset write-downs of $6 million, primarily related to manufacturing footprint improvements in North America Ride Performance, headcount reduction and cost improvement initiatives in Europe and China Clean Air, South America and Australia, of which $17 million was recorded in cost of sales, $12 million in SG&A, $1 million in engineering expense, $2 million in other expense and $4 million in depreciation and amortization expense. In the third quarter of 2017, we incurred $20 million in restructuring and related costs including asset write-downs of $1 million, primarily related to closing an OE Clean Air manufacturing plant and downsizing Ride Performance operations in Australia and cost improvement initiatives, of which $8 million was recorded in cost of sales, $11 million in SG&A and $1 million in depreciation and amortization expense. In the third quarter of 2016, we incurred $7 million in restructuring and related costs, primarily related to manufacturing footprint improvements in North America Ride Performance as well as headcount reduction and cost improvement initiatives in Europe and China Clean Air, of which $3 million was recorded in cost of sales and $4 million in SG&A. In the first nine months of 2017, we incurred $52 million in restructuring and related costs including asset write-downs of $3 million, primarily related to closing a Clean Air Belgian JIT plant in response to the end of production on a customer platform, closing an OE Clean Air manufacturing plant and downsizing Ride Performance operations in Australia and cost improvement initiatives, of which $31 million was recorded in cost of sales, $18 million in SG&A, and $3 million in depreciation and amortization expense. In the first nine months of 2016, we incurred $26 million in restructuring and related costs including asset write-downs of $5 million primarily related to manufacturing footprint improvements in North America Ride Performance as well as headcount reduction and cost improvement initiatives in Europe and China Clean Air and South America, of which $9 million was recorded in cost of sales, $12 million in SG&A, $2 million in other expense and $3 million in depreciation and amortization expense.

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



	December 31, 2016 Restructuring Reserve		2017 Expenses	2017 Cash Payments		Impact of Exchange Rates	September 30, 2017 Restructuring Reserve
	(Millions)
Employee Severance, Termination Benefits and Other Related Costs		$15	38	(18	)	2		$37

On June 29, 2017, our Board of Directors approved a restructuring initiative to close our Clean Air manufacturing plant in O'Sullivan Beach, Australia when General Motors and Toyota end vehicle production in the country, which occurred in October 2017. All such restructuring activities related to this initiative are expected to be completed by the first quarter 2018. We recorded total charges related to this initiative of $9 million in the third quarter of 2017 including asset write-downs of $1 million and $21 million in the first nine months of 2017 including asset write-downs of $2 million. The charges included severance payments to employees, the cost of decommissioning equipment, a lease termination payment and other costs associated with this action.

Under the terms of our amended and restated senior credit agreement that took effect on May 12, 2017, we are allowed to exclude, at our discretion, (i) up to $35 million in 2017 and $25 million each year thereafter of cash restructuring charges and related expenses, with the ability to carry forward any amount not used in one year to the next following year, and (ii) up to $150 million in the aggregate of all costs, expenses, fees, fines, penalties, judgments, legal settlements and other amounts associated with any restructuring, litigation, claim, proceeding or investigation related to or undertaken by us or any of our subsidiaries, together with any related provision for taxes, incurred for any quarterly period ending after May 12, 2017 in the calculation of the financial covenant ratios required under our senior credit facility. As of September 30, 2017, we elected not to exclude any of the $181 million of allowable cash charges and related expenses recognized in the first nine months of 2017 for antitrust settlement and restructuring related costs against the $150 million aggregate limit available under the terms of the senior credit facility or the $35 million annual limit for 2017.