RESTRUCTURING CHARGE

12 Months Ended

Dec. 31, 2011

RESTRUCTURING CHARGES [Abstract]

RESTRUCTURING CHARGE

RESTRUCTURING CHARGES

On December 9, 2010, our board of directors approved a plan to eliminate our use of mercury in the manufacture of chlor alkali products.  Under the plan, the 260,000 tons of mercury cell capacity at our Charleston, TN facility will be converted to 200,000 tons of membrane capacity capable of producing both potassium hydroxide and caustic soda.  The project has an estimated capital cost of approximately $160 million.  The board of directors also approved plans to reconfigure our Augusta, GA facility to manufacture bleach and distribute caustic soda, while discontinuing chlor alkali manufacturing at this site.  This action will reduce our chlor alkali manufacturing capacity by 100,000 tons.  We based our decision to convert and reconfigure on several factors.  First, during 2009 and 2010 we had experienced a steady increase in the number of customers unwilling to accept our products manufactured using mercury cell technology.  Second, there was federal legislation passed in 2008 governing the treatment of mercury that significantly limits our recycling options after December 31, 2012.  We concluded that exiting mercury cell technology production after 2012 represented an unacceptable future cost risk.  Further, the conversion of the Charleston, TN plant to membrane technology will reduce the electricity usage per ECU produced by approximately 25% and the configuration of the new plant will result in an increase in our capacity to produce potassium hydroxide.  The decision to reconfigure the Augusta, GA facility to manufacture bleach and distribute caustic soda removes the highest cost production capacity from our system.  We currently expect to complete the conversion and reconfiguration by the end of 2012.  We recorded a pretax restructuring charge of $28.0 million associated with these actions in the fourth quarter of 2010.  The restructuring charge included write-off of equipment and facility costs, acceleration of asset retirement obligations, employee severance and related benefit costs and lease and other contract termination costs.  For the year ended December 31, 2011, we recorded additional pretax restructuring charges of $2.8 million for employee severance and related benefit costs and facility exit costs.  We expect to incur additional restructuring charges through 2013 of approximately $8 million related to the implementation of plans to exit the use of mercury cell technology in the chlor alkali manufacturing process.

On November 3, 2010, we announced that we made the decision to relocate the Winchester centerfire ammunition manufacturing operations from East Alton, IL to Oxford, MS.  This relocation, when completed, is forecast to reduce Winchester's annual operating costs by approximately $30 million.  Consistent with this decision we have initiated an estimated $110 million five-year project, which includes approximately $80 million of capital spending.  The State of Mississippi and local governments have provided incentives which should offset approximately 40 percent of the capital spending.  We currently expect to complete this relocation by the end of 2015.  We recorded a pretax restructuring charge of $6.2 million associated with these actions in the fourth quarter of 2010.  The restructuring charge included employee severance and related benefit costs and a non-cash pension and other postretirement benefits curtailment charge.  For the year ended December 31, 2011, we recorded additional pretax restructuring charges of $7.0 million for employee severance and related benefits costs, a non-cash pension curtailment charge, employee relocation costs and facility exit costs.  These restructuring charges related primarily to the second quarter 2011 ratification of a new five and one half year Winchester, East Alton, IL union labor agreement.  We expect to incur additional restructuring charges through 2016 of approximately $17 million related to the transfer of these operations.

The following table summarizes the 2011 and 2010 activity by major component of these restructuring actions and the remaining balances of accrued restructuring costs as of December 31, 2011:

	Employee severance and job related benefits			Pension and other postretirement benefits curtailment			Lease and other contract termination costs			Employee relocation costs			Facility exit costs			Write-off of equipment and facility			Total
				($ in millions)
Balance January 1, 2010	$	-		$	-		$	-		$	-		$	-		$	-		$	-
2010 restructuring charges		6.0			3.0			1.0			-			6.7			17.5			34.2
Amounts utilized		-			(3.0	)		-			-			(6.7	)		(17.5	)		(27.2	)
Balance at December 31, 2010		6.0			-			1.0			-			-			-			7.0
2011 restructuring charges		6.4			1.1			-			2.2			1.0			-			10.7
Amounts utilized		(1.1	)		(1.1	)		(0.2	)		(2.2	)		(1.0	)		-			(5.6	)
Balance at December 31, 2011	$	11.3		$	-		$	0.8		$	-		$	-		$	-		$	12.1

As of December 31, 2011, we have incurred cash expenditures of $4.5 million related to these restructuring actions.  The remaining balance of $12.1 million is expected to be paid out in 2012 through 2016.