5. Restructuring Expense

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 2013. Approximately 35% of the $30 million will be non-cash charges. On a cumulative basis, the Company has incurred $12.4 million of restructuring expense under the 2011 New Castalloy Restructuring Plan as of April 1, 2012, of which $3.0 million was incurred during the first quarter of 2012.

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 fully 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 have been required under the prior 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. On a cumulative basis, the Company has incurred $9.3 million of restructuring expense under the 2011 Kansas City Restructuring Plan as of April 1, 2012, of which $0.5 million was incurred during the first quarter of 2012.

For the three months ended March 27, 2011, restructuring expense included $0.2 million of noncash curtailment losses related to the Company's pension plan that covers employees of the Kansas City facility.

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 (in thousands):

		00000000			00000000			00000000			00000000			00000000			00000000			00000000			00000000
	Three months ended April 1, 2012
	Kansas City									New Castalloy												Consolidated
	Employee									Employee
	Severance and									Severance and
	Termination									Termination			Accelerated
	Costs			Other			Total			Costs			Depreciation			Other			Total			Total
Balance, beginning of period	$	4,123		$	—		$	4,123		$	8,428		$	—		$	305		$	8,733		$	12,856
Restructuring expense		542			—			542			571			2,099			349			3,019			3,561
Utilized—cash		—			—			—			(156	)		—			(361	)		(517	)		(517	)
Utilized—noncash		—			—			—			—			(2,099	)		—			(2,099	)		(2,099	)

Balance, end of period	$	4,665		$	—		$	4,665		$	8,843		$	—		$	293		$	9,136		$	13,801


	Three months ended March 27, 2011
	Kansas City
	Employee
	Severance and
	Termination
	Costs			Other			Total
Restructuring expense		6,382			134			6,516
Utilized—cash		—			(134	)		(134	)
Utilized—noncash		(236	)		—			(236	)

Balance, end of period	$	6,146		$	—		$	6,146

2010 Restructuring Plan

In September 2010, the Company's unionized employees in Wisconsin ratified three separate new seven-year labor agreements which took effect in April 2012 when the prior contracts expired. 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 fully implemented, the production system in Wisconsin, like York, will include the addition of a flexible workforce component.

Based on the new ratified labor agreements (2010 Restructuring Plan), the Company expects to have about 250 fewer full-time hourly unionized employees in its Milwaukee-area facilities when the contracts are fully implemented than would have been required under the prior contract. In Tomahawk, the Company expects to have about 75 fewer full-time hourly unionized employees when the contract is fully implemented than would have been required under the prior 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 $61.5 million of restructuring expense under the 2010 Restructuring Plan as of April 1, 2012, of which $4.5 million was incurred during the first quarter of 2012.

The following table summarizes the Motorcycles segment's 2010 Restructuring Plan reserve activity and balances as recorded in accrued liabilities (in thousands):


	Three months ended April 1, 2012			Three months ended March 27, 2011
	Employee Severance and Termination Costs			Employee Severance and Termination Costs
Balance, beginning of period	$	20,361		$	8,652
Restructuring expense		1,886			3,144
Utilized - cash		(26	)		(594	)

Balance, end of period	$	22,221		$	11,202

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 (2009 Restructuring Plan) 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 Plan 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 $386.6 million of restructuring and impairment expense under the 2009 Restructuring Plan as of April 1, 2012, of which $3.3 million was incurred during the first quarter of 2012. Approximately 3,600 employees have left the Company under the 2009 Restructuring Plan as of April 1, 2012.

The following table summarizes the Company's 2009 Restructuring Plan reserve activity and balances recorded in accrued liabilities (in thousands):


	Three months ended April 1, 2012
	Motorcycles & Related Products
	Employee Severance and Termination Costs			Accelerated Depreciation		Other			Total
Balance, beginning of period	$	10,089		$	—	$	—		$	10,089
Restructuring expense		323			—		5,681			6,004
Utilized - cash		(1,846	)		—		(5,669	)		(7,515	)
Utilized - noncash		—			—		—			—

Balance, end of period	$	8,566		$	—	$	12		$	8,578


	Three months ended March 27, 2011
	Motorcycles & Related Products
	Employee Severance and Termination Costs			Accelerated Depreciation		Other			Total
Balance, beginning of period	$	23,818		$	—	$	2,764		$	26,582
Restructuring expense		2,954			—		10,385			13,339
Utilized - cash		(4,028	)		—		(10,546	)		(14,574	)
Utilized - noncash		—			—		296			296

Balance, beginning of period	$	22,744		$	—	$	2,899		$	25,643

Other restructuring costs under the 2009 Restructuring Plan include items such as the exit costs for terminating supply contracts, lease termination costs and moving costs. During the first quarter of 2012, the Company released $2.7 million of its 2009 Restructuring Plan reserve related to employee severance costs as these costs are no longer expected to be incurred.