Restructuring of Operations

3 Months Ended

Mar. 31, 2012

Restructuring of Operations

Note 4. Restructuring of Operations

Our restructuring activities primarily include rationalizing our operating footprint by consolidating facilities, positioning operations in lower cost locations and reducing overhead costs. Restructuring expense includes costs associated with current and previously announced actions and is comprised of contractual and noncontractual separation costs and exit costs, including costs associated with lease continuation obligations and certain operating costs of facilities that we are in the process of closing. We classify the incremental depreciation associated with a planned closure as accelerated depreciation/impairment and also include this cost in restructuring expense.

Restructuring expense of $6 during the first quarter of 2012 is primarily attributable to costs associated with previously announced initiatives and includes $4 of severance and related benefit costs and $2 of exit costs.

During the first quarter of 2011, we reached an agreement with the lessor to settle our LVD lease associated with the previously announced planned closure of the Yennora, Australia facility. Under the terms of the agreement, we recognized $20 of lease termination costs. Additionally, we approved the realignment of several manufacturing operations, including the planned closure of our LVD manufacturing facility in Marion, Indiana. Including costs associated with previously announced initiatives, we expensed $30 for restructuring actions during the first quarter of 2011, including $1 of severance and related benefit costs, $28 of exit costs and $1 of accelerated depreciation/impairment cost.

Restructuring charges and related payments and adjustments —

	Employee
	Termination			Exit
	Benefits			Costs			Total
Balance at December 31, 2011	$	30		$	3		$	33
Activity during the period:
Charges to restructuring		4			2			6
Cash payments		(6	)		(2	)		(8	)
Balance at March 31, 2012	$	28		$	3		$	31

At March 31, 2012, the accrued employee termination benefits relate to the reduction of approximately 1,200 employees to be completed over the next two years. The exit costs relate primarily to lease terminations. We estimate cash expenditures to approximate $18 in 2012 and $13 thereafter.

Cost to complete — The following table provides project-to-date and estimated future expenses for completion of our pending restructuring initiatives for our business segments.

	Expense Recognized						Future
	Prior to				Total		Cost to
	2012		2012		to Date		Complete
LVD	$	23	$	2	$	25	$	11
Power Technologies		12				12		6
Commercial Vehicle		22		4		26		14
Off-Highway		8				8		2
Structures		2				2		5
Corporate		6				6		2
Total	$	73	$	6	$	79	$	40

The future cost to complete includes estimated separation costs, primarily those associated with one-time benefit programs, and exit costs, including lease continuation costs, equipment transfers and other costs which are required to be recognized as closures are finalized or as incurred during the closure. Included in the future cost to complete is the lease continuation obligation associated with the previously announced closure of our Commercial Vehicle facility in Kalamazoo, Michigan, which we expect to cease using in 2012.