RESTRUCTURING CHARGE

3 Months Ended

Mar. 31, 2012

RESTRUCTURING CHARGE [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.  For the three months ended March 31, 2012 and 2011, we recorded pretax restructuring charges of $0.3 million and less than $0.1 million, respectively, for the accretion of employee severance and related benefit 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.  For the three months ended March 31, 2012 and 2011, we recorded pretax restructuring charges of $1.6 million and less than $0.1 million, respectively, for the accretion of employee severance and related benefits costs, employee relocation costs and facility exit costs.  We expect to incur additional restructuring charges through 2016 of approximately $15 million related to the transfer of these operations.

The following table summarizes the activity by major component of these restructuring actions and the remaining balances of accrued restructuring costs as of March 31, 2012:

	Employee severance and job related benefits			Lease and other contract termination costs		Employee relocation costs			Facility exit costs			Total
	($ in millions)
Balance at January 1, 2011	$	6.0		$	1.0	$	-		$	-		$	7.0
2011 restructuring charges		0.1			-		-			-			0.1
Balance at March 31, 2011	$	6.1		$	1.0	$	-		$	-		$	7.1
Balance at January 1, 2012	$	11.3		$	0.8	$	-		$	-		$	12.1
2012 restructuring charges		0.9			-		0.8			0.2			1.9
Amounts utilized		(0.7	)		-		(0.8	)		(0.2	)		(1.7	)
Balance at March 31, 2012	$	11.5		$	0.8	$	-		$	-		$	12.3

As of March 31, 2012, we have incurred cash expenditures of $6.2 million and non-cash charges of $28.3 million related to these restructuring actions.  The remaining balance of $12.3 million is expected to be paid out in 2012 through 2016.

The following table summarizes the cumulative restructuring charges by major component of these actions through March 31, 2012:

	Chlor Alkali Products		Winchester		Total
	($ in millions)
Write-off of equipment and facility	$	17.5	$	-	$	17.5
Employee severance and job related benefits		5.2		8.1		13.3
Facility exit costs		7.3		0.6		7.9
Pension and other postretirement benefits curtailment		-		4.1		4.1
Employee relocation costs		0.1		2.9		3.0
Lease and other contract termination costs		1.0		-		1.0
Total cumulative restructuring charges	$	31.1	$	15.7	$	46.8