Restructuring and Other Charges

6 Months Ended

Jun. 30, 2011

Restructuring and Other Charges [Abstract]

Restructuring and Other Charges

(6)   Restructuring and Other Charges

Over the past several years, we have adopted plans to restructure portions of our operations. These plans were approved by our Board of Directors and were designed to reduce operational and administrative overhead costs throughout the business. In 2010, we incurred $19 million in restructuring and related costs, of which $14 million was recorded in cost of sales and $5 million was recorded in depreciation and amortization expense. In the second quarter of 2011, we incurred $2 million in restructuring and related costs, all of which was recorded in cost of sales. For the first six months of 2011, we incurred $3 million in restructuring and related costs, primarily related to headcount reductions in Europe and the closure of our ride control plant in Cozad, Nebraska, all of which was recorded in cost of sales.

Amounts related to activities that are part of our restructuring plans are as follows:

	December 31,									June 30,
	2010		2011			Impact of				2011
	Restructuring		Cash			Exchange		Reserve		Restructuring
	Reserve		Payments			Rates		Adjustments		Reserve
	(Millions)
Severance	$	7		(4	)		—		—	$	3

Under the terms of our amended and extended senior credit agreement that took effect on June 3, 2010, we are allowed to exclude $60 million of cash charges and expenses, before taxes, related to cost reduction initiatives incurred after June 3, 2010 from the calculation of the financial covenant ratios required under our senior credit facility. As of June 30, 2011, we have excluded $12 million in cumulative allowable charges relating to restructuring initiatives against the $60 million available under the terms of the senior credit facility.

On September 22, 2009, we announced that we will be closing our original equipment ride control plant in Cozad, Nebraska. Approximately 500 positions are being eliminated at the Cozad plant. As of June 30, 2011, 95 percent of those positions have been eliminated. We are hiring at other facilities as we move production from Cozad to those facilities, which will result in a net decrease of approximately 60 positions. We originally planned to have completed the closing of this facility by the end of 2010, however, as a result of increased customer demand and to better optimize the transfer of some of the manufacturing activities, we are supplying certain of our other facilities with components from Cozad to support this increased demand until capacity adjustments are completed at our other facilities. During 2009 and 2010, we recorded $11 million and $10 million, respectively, of restructuring and related expenses related to this initiative, of which approximately $16 million represents cash expenditures.