COSTS ASSOCIATED WITH RATIONALIZATION PROGRAMS

In order to maintain our global competitiveness, we have implemented rationalization actions over the past several years to reduce high-cost manufacturing capacity and to reduce associate headcount. The net rationalization charges included in Income before Income Taxes are as follows:



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In millions)	2011		2010		2011			2010
New charges	$	25	$	8	$	82		$	35
Reversals	—		—		(2		)	(19		)
	$	25	$	8	$	80		$	16

The following table shows the roll-forward of our liability between periods:



	Associate-			Other
(In millions)	Related Costs			Costs			Total
Balance at December 31, 2010	$	212		$	18		$	230
2011 Charges	49			33			82
Incurred	(50		)	(31		)	(81		)
Reversed to the statement of operations	(1		)	(1		)	(2		)
Foreign currency translation	—			(2		)	(2		)
Balance at September 30, 2011	$	210		$	17		$	227

During the third quarter of 2011, net rationalization charges of $25 million were recorded. New charges of $25 million were comprised of $6 million for plans initiated in 2011, consisting of $4 million of associate severance costs and $2 million for other exit and non-cancelable lease costs, and $19 million for plans initiated primarily in 2010, consisting of $4 million of associate severance costs and $15 million of other exit and non-cancelable lease costs, mainly due to the July 2011 closure of our Union City, Tennessee manufacturing facility. Substantially all of the new charges relate to future cash outflows.

During the first nine months of 2011, net rationalization charges of $80 million were recorded. New charges of $82 million were comprised of $18 million for plans initiated in 2011, consisting of $15 million of associate severance costs and $3 million for other exit and non-cancelable lease costs, and $64 million for plans initiated primarily in 2010, consisting of $34 million of associate severance costs and $30 million of other exit and non-cancelable lease costs, mainly due to the July 2011 closure of our Union City, Tennessee manufacturing facility. Substantially all of the new charges relate to future cash outflows. The net charges in the first nine months of 2011 also included the reversal of $2 million of charges for actions no longer needed for their originally intended purposes. Approximately 500 associates will be released under 2011 plans.

In the first nine months of 2011, $50 million was incurred for associate severance payments and $31 million was incurred for other exit and non-cancelable lease costs.

The accrual balance of $227 million at September 30, 2011 consists of $210 million for associate severance costs that are expected to be substantially utilized within the next 12 months and $17 million primarily for other exit and non-cancelable lease costs. At September 30, 2011, $86 million and $106 million, respectively, of the accrual balance relates to plans associated with the closure of our Union City, Tennessee manufacturing facility and the announced discontinuation of consumer tire production at one of our facilities in Amiens, France.

Asset write-offs and accelerated depreciation charges of $12 million and $46 million were recorded in cost of goods sold (“CGS”) in the three and nine months ended September 30, 2011, respectively, and were related primarily to property and equipment in our Union City, Tennessee manufacturing facility.

In the third quarter of 2010, net rationalization charges of $8 million were recorded. New charges of $8 million were comprised of $4 million for plans initiated in 2010 and $4 million for plans initiated primarily in 2009. These charges consist of $4 million for associate severance costs and $4 million for other exit and non-cancelable lease costs. Substantially all of these charges related to future cash outflows.

For the first nine months of 2010, net rationalization charges of $16 million were recorded. New charges of $35 million were comprised of $14 million for plans initiated in 2010, consisting of $11 million for associate severance and pension costs and $3 million for other exit and non-cancelable lease costs, and $21 million for plans initiated primarily in 2009, consisting of $4 million for associate severance costs and $17 million for other exit and non-cancelable lease costs. Substantially all of these charges related to future cash outflows. The net charges in the first nine months of 2010 also included the reversal of $19 million of charges for actions no longer needed for their originally intended purposes.

Asset write-offs and accelerated depreciation charges of $4 million and $13 million were recorded in CGS in the three and nine months ended September 30, 2010, respectively, and were related primarily to the closure of our Taiwan facility.

Approximately 100 associates were released under programs initiated in 2011 and approximately 2,200 associates, mainly due to the July 2011 closure of our Union City, Tennessee manufacturing facility, were released under programs initiated in 2010 as of September 30, 2011.