4. Restructuring Expense and Other Impairments

2011 Restructuring Plans

In December 2011, the Company made a decision to cease operations at New Castalloy, its Australian subsidiary and producer of cast motorcycle wheels and wheel hubs, and source those components through other existing suppliers (2011 New Castalloy Restructuring Plan). The Company expects the transition of supply from New Castalloy to be complete by mid-2013. The decision to close New Castalloy comes as part of the Company's overall long term strategy to develop world-class manufacturing capability throughout the Company by restructuring and consolidating operations for greater competitiveness, efficiency and flexibility. In connection with this decision, the Company will reduce its workforce by approximately 200 employees by mid-2013.

Under the 2011 New Castalloy Restructuring Plan restructuring expenses consist of employee severance and termination costs, accelerated depreciation and other related costs. The Company expects to incur about $30 million in restructuring charges related to the transition through 2012. Approximately 35 percent of the $30 million will be non-cash charges. During 2011, the Company recorded a $9.4 million restructuring charge related to the 2011 New Castalloy Restructuring Plan.

In February 2011, the Company's unionized employees at its facility in Kansas City, Missouri ratified a new seven-year labor agreement. The new agreement took effect on August 1, 2011. The new contract is similar to the labor agreements ratified at the Company's Wisconsin facilities in September 2010 and its York, Pennsylvania facility in December 2009, and allows for similar flexibility and increased production efficiency. Once the new contract is implemented, the production system in Kansas City, like Wisconsin and York, will include the addition of a flexible workforce component.

After taking actions to implement the new ratified labor agreement (2011 Kansas City Restructuring Plan), the Company expects to have about 145 fewer full-time hourly unionized employees in its Kansas City facility than would be required under the existing contract.

Under the 2011 Kansas City Restructuring Plan, restructuring expenses consist of employee severance and termination costs and other related costs. The Company expects to incur approximately $15 million in restructuring expenses related to the new contract through 2012, of which approximately 10% are expected to be non-cash. During 2011, the Company recorded an $8.8 million restructuring charge related to the 2011 Kansas City Restructuring Plan.

The following table summarizes the Motorcycle Segment's 2011 Kansas City Restructuring Plan and 2011 New Castalloy Restructuring Plan reserve activity and balances as recorded in accrued liabilities for the year ended December 31 (in thousands):


	2011
	Kansas City									New Castalloy										Consolidated
	Employee Severance and Termination Costs			Other			Total			Employee Severance and Termination Costs		Accelerated Depreciation			Other		Total			Total



Restructuring expense		8,447			342			8,789			8,428		656			305		9,389			18,178
Utilized – cash		(4,088	)		(342	)		(4,430	)		—		—			—		—			(4,430	)
Utilized – noncash		(236	)		—			(236	)		—		(656	)		—		(656	)		(892	)

Balance, end of period	$	4,123		$	—		$	4,123		$	8,428	$	—		$	305	$	8,733		$	12,856

2010 Restructuring Plan

In September 2010, the Company's unionized employees in Wisconsin ratified three separate new seven-year labor agreements which take effect in April 2012 when the current contracts expire. The new contracts are similar to the labor agreement ratified at the Company's York, Pennsylvania facility in December 2009 and allow for similar flexibility and increased production efficiency. Once the new contracts are implemented, the production system in Wisconsin, like York, will include the addition of a flexible workforce component.

Based on the new ratified labor agreements, the Company expects to have about 250 fewer full-time hourly unionized employees in its Milwaukee-area facilities when the contracts are implemented in 2012 than would be required under the existing contract. In Tomahawk, the Company expects to have about 75 fewer full-time hourly unionized employees when the contract is implemented than would be required under the current contract.

Under the 2010 Restructuring Plan, restructuring expenses consist of employee severance and termination costs and other related costs. The Company expects to incur approximately $67 million in restructuring expenses related to the new contracts through 2012, of which approximately 42% are expected to be non-cash. On a cumulative basis, the Company has incurred $57.0 million of restructuring and impairment expense under the 2010 Restructuring Plan as of December 31, 2011, of which $12.6 million was incurred during the year ended December 31, 2011.

The following table summarizes the Motorcycle Segment's 2010 Restructuring Plan reserve activity and balances as recorded in accrued liabilities for the following years ended December 31 (in thousands):


	2011			2010
	Employee Severance and Termination Costs			Employee Severance and Termination Costs


Balance, beginning of period	$	8,652		$	—
Restructuring expense		12,575			44,383
Utilized – cash		(866	)		(7,557	)
Utilized – noncash		—			(28,174	)

Balance, end of period	$	20,361		$	8,652

For the year ended December 31, 2010, restructuring expense included $28.2 million of noncash curtailment losses related to the Company's pension and postretirement healthcare plans that cover employees of the affected facilities in Milwaukee and Tomahawk, Wisconsin.

2009 Restructuring Plan

During 2009, in response to the U.S. economic recession and worldwide slowdown in consumer demand, the Company committed to a volume reduction and a combination of restructuring actions that are expected to be completed at various dates between 2009 and 2012. The actions were designed to reduce administrative costs, eliminate excess capacity and exit non-core business operations. The Company's significant announced actions include the restructuring and transformation of its York, Pennsylvania production facility including the implementation of a new more flexible unionized labor agreement; consolidation of facilities related to engine and transmission production; outsourcing of certain distribution and transportation activities and exiting the Buell product line.

The 2009 restructuring plans included a reduction of approximately 2,700 to 2,900 hourly production positions and approximately 720 non-production, primarily salaried positions within the Motorcycles segment and approximately 100 salaried positions in the Financial Services segment.

Under the 2009 Restructuring Plan, restructuring expenses consist of employee severance and termination costs, accelerated depreciation on the long-lived assets that will be exited as part of the 2009 Restructuring Plan and other related costs. The Company expects total costs related to the 2009 Restructuring Plan to result in restructuring and impairment expenses of approximately $388 million to $408 million from 2009 to 2012, of which approximately 30% are expected to be non-cash. On a cumulative basis, the Company has incurred $380.6 million of restructuring and impairment expense under the 2009 Restructuring Plan as of December 31, 2011, of which $37.2 million was incurred during the year ended December 31, 2011. Approximately 3,600 employees have left the Company under the 2009 Restructuring Plan as of December 31, 2011.

The following tables summarize the Company's 2009 Restructuring Plan reserve activity and balances as recorded in accrued liabilities for the following years ended December 31 (in thousands):


	2011
	Motorcycles & Related Products															Financial Services									Consolidated
	Employee Severance and Termination Costs			Accelerated Depreciation			Asset Impairment			Other			Total			Employee Severance and Termination Costs			Other			Total			Total
Balance, beginning of period	$	23,818		$	—		$	—		$	2,764		$	26,582		$	—		$	—		$	—		$	26,582
Restructuring expense		5,062			—			—			34,470			39,532			—			—			—			39,532
Utilized – cash		(16,498	)		—			—			(37,234	)		(53,732	)		—			—			—			(53,732	)
Utilized – noncash		—			—			—			—			—			—			—			—			—
Noncash reserve release		(2,293	)											(2,293	)											(2,293	)

Balance, end of period	$	10,089		$	—		$	—		$	—		$	10,089		$	—		$	—		$	—		$	10,089


	2010
	Motorcycles & Related Products															Financial Services									Consolidated
	Employee Severance and Termination Costs			Accelerated Depreciation			Asset Impairment			Other			Total			Employee Severance and Termination Costs			Other			Total			Consolidated Total
Balance, beginning of period	$	36,070		$	—		$	—		$	31,422		$	67,492		$	219		$	—		$	219		$	67,711
Restructuring expense		31,119			47,923			—			40,083			119,125			—			—			—			119,125
Utilized – cash		(44,394	)		—			—			(61,514	)		(105,908	)		(44	)		—			(44	)		(105,952	)
Utilized – noncash		1,023			(47,923	)		—			(3,406	)		(50,306	)		(175	)		—			(175	)		(50,481	)
Noncash reserve release		—			—			—			(3,821	)		(3,821	)		—			—			—			(3,821	)

Balance, end of period	$	23,818		$	—		$	—		$	2,764		$	26,582		$	—		$	—		$	—		$	26,582


	2009
	Motorcycles & Related Products															Financial Services									Consolidated
	Employee Severance and Termination Costs			Accelerated Depreciation			Asset Impairment			Other			Total			Employee Severance and Termination Costs			Other			Total			Consolidated Total
Restructuring expense	$	103,769		$	26,905		$	18,024		$	72,278		$	220,976		$	1,679		$	1,623		$	3,302		$	224,278
Utilized – cash		(29,885	)		—			—			(40,856	)		(70,741	)		(1,460	)		(1,197	)		(2,657	)		(73,398	)
Utilized – noncash		(37,814	)		(26,905	)		(18,024	)		—			(82,743	)		—			(426	)		(426	)		(83,169	)

Balance, end of period	$	36,070		$	—		$	—		$	31,422		$	67,492		$	219		$	—		$	219		$	67,711

Other restructuring costs include items such as the exit costs for terminating supply contracts, lease termination costs and moving costs. During the fourth quarter of 2011, the Company released $2.3 million of its 2009 Restructuring Plan reserve related to employee severance costs as these costs are no longer expected to be incurred. In addition, the Company released $3.8 million of its 2009 Restructuring Plan reserve related to exiting the Buell product line during the fourth quarter of 2010, as these costs are no longer expected to be incurred.