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 $165 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. 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%. The decision to reconfigure the Augusta, GA facility to manufacture bleach and distribute caustic soda removes the highest cost production capacity from our system. Mercury cell chlor alkali production at the Augusta, GA facility was discontinued at the end of September, 2012 and the first of the two new membrane cell rooms at Charleston, TN was successfully started up in the third quarter of 2012. The reconfiguration at Charleston, TN will be completed in the fourth quarter of 2012 with the expected startup of the second membrane cell room. These actions reduced our Chlor Alkali capacity by 160,000 tons. For the three months ended September 30, 2012 and 2011, we recorded pretax restructuring charges of $0.5 million and $2.0 million, respectively, for employee severance and related benefit costs and facility exit costs. For the nine months ended September 30, 2012 and 2011, we recorded pretax restructuring charges of $1.0 million and $2.3 million, respectively, for employee severance and related benefit costs and facility exit costs. We expect to incur additional restructuring charges through 2013 of approximately $7 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 and nine months ended September 30, 2012, we recorded pretax restructuring charges of $1.8 million and $5.0 million, respectively, for employee severance and related benefit costs, employee relocation costs and facility exit costs. For the three and nine months ended September 30, 2011 we recorded pretax restructuring charges of $2.1 million and $4.3 million, respectively, for employee severance and related benefit costs, employee relocation costs and facility exit costs. Additionally, for the nine months ended September 30, 2011 a portion of the charge related to a non-cash pension curtailment. These 2011 restructuring charges related primarily to the 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 $11 million related to the transfer of these operations.

The following table summarizes the activity by major component of these 2010 restructuring actions and the remaining balances of accrued restructuring costs as of September 30, 2012:



		Employee severance and job related benefits			Pension and other postretirement benefits curtailment			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
	Restructuring charges:
	First quarter	0.1			—			—			—			—			0.1
	Second quarter	0.9			1.1			—			0.3			0.1			2.4
	Third quarter	2.7			—			—			1.0			0.4			4.1
	Amounts utilized	(0.2		)	(1.1		)	(0.2		)	(1.3		)	(0.5		)	(3.3		)
Balance at September 30, 2011		$	9.5		$	—		$	0.8		$	—		$	—		$	10.3
Balance at January 1, 2012		$	11.3		$	—		$	0.8		$	—		$	—		$	12.1
	Restructuring charges:
	First quarter	0.9			—			—			0.8			0.2			1.9
	Second quarter	1.0			—			—			0.7			0.1			1.8
	Third quarter	1.3			—			—			0.5			0.5			2.3
	Amounts utilized	(1.5		)	—			(0.2		)	(2.0		)	(0.8		)	(4.5		)
Balance at September 30, 2012		$	13.0		$	—		$	0.6		$	—		$	—		$	13.6

The following table summarizes the cumulative restructuring charges of these 2010 restructuring actions by major component through September 30, 2012:



	Chlor Alkali Products		Winchester		Total
	($ in millions)
Write-off of equipment and facility	$	17.5	$	—	$	17.5
Employee severance and job related benefits	5.5		10.1		15.6
Facility exit costs	7.7		0.8		8.5
Pension and other postretirement benefits curtailment	—		4.1		4.1
Employee relocation costs	0.1		4.1		4.2
Lease and other contract termination costs	1.0		—		1.0
Total cumulative restructuring charges	$	31.8	$	19.1	$	50.9

As of September 30, 2012, we have incurred cash expenditures of $9.0 million and non-cash charges of $28.3 million related to these restructuring actions. The remaining balance of $13.6 million is expected to be paid out in 2012 through 2016.