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 was converted to 200,000 tons of membrane capacity capable of producing both potassium hydroxide and caustic soda. 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 limited 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 reduced the electricity usage per ECU produced by approximately 25%. The decision to reconfigure the Augusta, GA facility to manufacture bleach and distribute caustic soda removed 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 conversion at Charleston, TN was completed in the second half of 2012 with the successful start-up of two new membrane cell lines. These actions reduced our Chlor Alkali capacity by 160,000 tons. The completion of these projects eliminated our chlor alkali production using mercury cell technology. For the three months ended September 30, 2013 and 2012, we recorded pretax restructuring charges of $1.3 million and $0.5 million, respectively, for employee severance and related benefit costs, employee relocation, lease and other contract termination costs and facility exit costs related to these actions. For the nine months ended September 30, 2013 and 2012, we recorded pretax restructuring charges of $2.7 million and $1.0 million, respectively, for employee severance and related benefit costs, employee relocation, lease and other contract termination costs and facility exit costs related to these actions. We expect to incur additional restructuring charges through 2014 of approximately $3 million related to exiting 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 pistol and rifle 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 $35 million to $40 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 2016. For the three months ended September 30, 2013 and 2012, we recorded pretax restructuring charges of $0.3 million and $1.8 million, respectively, for employee severance and related benefit costs, employee relocation costs and facility exit costs related to these actions. For the nine months ended September 30, 2013 and 2012, we recorded pretax restructuring charges of $1.4 million and $5.0 million, respectively, for employee severance and related benefit costs, employee relocation costs and facility exit costs related to these actions. We expect to incur additional restructuring charges through 2016 of approximately $6 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, 2013:



		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, 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
Balance at January 1, 2013		$	13.5		$	0.4		$	—		$	—		$	13.9
	Restructuring charges (credits):
	First quarter	0.6			—			0.1			1.6			2.3
	Second quarter	(0.7		)	—			0.3			0.6			0.2
	Third quarter	0.2			(0.4		)	0.2			1.6			1.6
	Amounts utilized	(2.8		)	—			(0.6		)	(3.8		)	(7.2		)
Balance at September 30, 2013		$	10.8		$	—		$	—		$	—		$	10.8

The following table summarizes the cumulative restructuring charges of these 2010 restructuring actions by major component through September 30, 2013:



	Chlor Alkali Products		Winchester		Total
	($ in millions)
Write-off of equipment and facility	$	17.5	$	—	$	17.5
Employee severance and job related benefits	4.7		11.9		16.6
Facility exit costs	12.3		1.3		13.6
Pension and other postretirement benefits curtailment	—		4.1		4.1
Employee relocation costs	0.6		4.4		5.0
Lease and other contract termination costs	0.7		—		0.7
Total cumulative restructuring charges	$	35.8	$	21.7	$	57.5

As of September 30, 2013, we have incurred cash expenditures of $18.4 million and non-cash charges of $28.3 million related to these restructuring actions. The remaining balance of $10.8 million is expected to be paid out through 2016.