Mobile Industries Process Industries Aerospace and Defense INTEREsT EXPENsE aND INcOME:  27 THE TIMKEN COMPANY Interest expense for 2010 decreased compared to 2009 primarily due to lower average debt levels, partially offset by the amortization  of deferred financing costs associated with the refinancing of the Company’s former $500 million Amended and Restated Credit  Agreement (Former Senior Credit Facility) and the issuance of $250 million aggregate principal amount of fixed-rate 6% unsecured  senior notes (Senior Notes), both of which occurred in the third quarter of 2009. Interest income increased for 2010 compared to 2009  due to significantly higher average invested cash balances in 2010. In 2010, the Company recorded fixed asset impairment charges of $2.0 million at its location in Mesa, Arizona. The impairment charges  were recorded as a result of the carrying value of certain machinery and equipment exceeding their expected future cash flows. In October 2009, the Company announced the consolidation of its distribution centers in Bucyrus, Ohio and Spartanburg, South Carolina  into a leased facility near the existing Spartanburg location. The closure of the Bucyrus Distribution Center was completed in June 2011.  This initiative is expected to deliver annual pretax savings of approximately $4 million to $8 million. During 2009, the Company recorded  $4.5 million of severance and related benefit costs related to this closure. In 2009, the Company recorded impairment charges of $27.7 million, exit costs of $1.6 million and severance and related benefits of  $0.6 million related to the rationalization of its three bearing plants in Canton, Ohio. In 2009, the Company closed two of the three  bearing plants. The significant impairment charge was recorded during the second quarter of 2009 as a result of the rapid deterioration  of the market sectors served by one of the rationalized plants resulting in the carrying value of the fixed assets for this plant exceeding  their projected future cash flows. The Company then arrived at fair value by either valuing the assets in use, where the assets were still  producing product, or in exchange, where the assets had been idled. The fair value was determined based on market comparisons of  similar assets. In 2010, the Company recorded $1.0 million of exit costs as a result of Process Industries’ rationalization plans primarily  due to demolition costs. In addition to the above charges, the Company recorded $3.1 million of environmental exit costs in 2010 at the site of its former plant  in Columbus, Ohio. In 2009, the Company recorded impairment charges of $71.7 million for certain fixed assets in the United States, Canada, France and  China related to several automotive product lines. The Company reviewed these assets for impairment during the fourth quarter due to  declining sales and as part of the Company’s initiative to exit programs where adequate returns could not be obtained through pricing  initiatives. Incorporating this information into its annual long-term forecasting process, the Company determined the undiscounted  projected future cash flows for these product lines could not support the carrying value of these asset groups. The Company then  arrived at fair value by either valuing the assets in use where the assets were still producing product or in exchange where the assets  had been idled. In March 2007, the Company announced the closure of its manufacturing facility in Sao Paulo, Brazil. The Company completed the  closure of this manufacturing facility on March 31, 2010. During 2010, the Company recorded $4.4 million of exit costs, $1.3 million of  severance and related benefit costs and $1.1 million of impairment charges associated with the closure of this facility. The exit costs  were primarily due to site remediation costs. During 2009, the Company recorded $5.2 million of severance and related benefit costs  and $1.7 million of exit costs associated with the closure of this facility. MANAgEMENT’s dIsCussION ANd ANAlYsIs OF FINANCIAl CONdITION ANd rEsulTs OF OPErATIONs  2010 2009 $ Change  % Change  Interest expense $ 38.2 $ 41.9 $ (3.7) (8.8)% Interest income  $ (3.7) $ (1.9) $ (1.8) (94.7)%