Tecumseh Products 2012 Annual Report Download - page 54

53
Our liability with regard to these awards is re-measured in each quarterly reporting period. The fair value of the phantom shares
is based on the closing stock price on our Class A common stock on the last day of the period. At December 31, 2012 and
December 31, 2011, the closing stock price on our Class A common stock was $4.62 and $4.70 respectively.
We measure the fair value of each SAR based on the closing stock price of Class A common stock on the last day of the period,
using a Black-Scholes valuation model. The fair value of each SAR was estimated as of December 31, 2012, 2011 and 2010
using the following assumptions:
2012 2011 2010
Risk-free interest rate ............................................................................ 0.27%-0.52% 0.4%-0.83% 1.65%-2.39%
Dividend yield ....................................................................................... 0.0% 0.0% 0.0%
Expected life (years).............................................................................. 2.2-4.0 years 3.2-5.0 years 4.2-6.0 years
Volatility................................................................................................ 63.63% 80.66% 85.95%
In addition to the awards to our employees, we grant deferred stock units ("DSUs") to our non-employee directors under our
Outside Directors' Deferred Stock Unit Plan. These awards are fully vested when made. We measure the fair value of
outstanding DSUs based upon the closing stock price of our Class A common stock on the last day of the reporting period. We
pay out the DSUs to a director after the earlier of a Company Change in Control, as defined in the plan, or the date when he or
she ceases to be a non-employee director for any reason. Since the DSUs are settled in cash rather than by issuing equity
instruments, we record an expense with a corresponding liability on our balance sheet. We recorded a liability of $0.6 million
and $0.1 million as of December 31, 2012 and December 31, 2011, respectively.
NOTE 11. Impairments, Restructuring Charges and Other Items
The charges (gains) recorded as impairments, restructuring charges, and other items are as follows:
For the years ended December 31,
(in millions) 2012 2011 2010
Severance, restructuring costs, and special termination benefits............................... $ 3.8 $ 8.0 $ 2.5
Impairment of investment and assets......................................................................... — 0.4 0.4
Environmental reserve for sold building.................................................................... 0.6 0.1 1.2
Legal settlement......................................................................................................... — — 7.3
Curtailment and settlement gain on postretirement benefits...................................... (45.0)—
(0.4)
Refund of settlement notice and administrative costs................................................ (0.1)— —
Moving costs .............................................................................................................. 0.1 — —
Settlement loss on hourly pension plan reversion...................................................... — — 29.4
Tax expense on proceeds from hourly retirement plan reversion.............................. — — 10.9
Final settlement of previously terminated salary retirement plan, net of excise tax.. ——
(1.0)
Total impairments, restructuring charges, and other items........................................ $ (40.6) $ 8.5 $ 50.3
2012
Operating income included $40.6 million of income from impairments, restructuring charges and other items in 2012. This
included $3.8 million related to severance associated with a reduction in force at our Brazilian ($2.6 million), North American
($0.3 million), French ($0.6 million) and Corporate ($0.3 million) locations, postretirement curtailment gains of $45.0 million
(see Note 5, "Pension and Other Postretirement Benefit Plans", for additional information), an increase of $0.6 million for
additional estimated environmental costs associated with the remediation activities at our former Tecumseh, Michigan facility,
income of $0.1 million related to a refund of notice and administrative costs related to the antitrust investigation settlement
agreement which we entered in October, 2012 (see Note 15, "Commitments and Contingencies", for additional information)
and $0.1 million of costs related to relocation of our corporate office.