Special & Restructuring (Recoveries) Charges, net

Special and Restructuring (Recoveries) Charges, net

Special and restructuring charges, net consist of restructuring costs (including costs to exit a product line or program) as well as certain special charges such as significant litigation settlements and other transactions (charges or recoveries) that are described below. All items described below are recorded in Special and restructuring (recoveries) charges, net on our consolidated statements of income. Certain other special and restructuring charges such as inventory related items may be recorded in cost of revenues given the nature of the item.

The table below (in thousands) summarizes the amounts recorded within the special and restructuring (recoveries) charges, net line item on the consolidated statements of income for the periods ending April 2, 2017 and April 3, 2016:



	Special & Restructuring (Recoveries) Charges, net
	For the quarter ended
	April 2, 2017			April 3, 2016
Special (recoveries) charges, net	$	(2,268	)	$	776
Restructuring charges, net	1,458			1,163
Total special and restructuring (recoveries) charges, net	$	(810	)	$	1,939

Special (Recoveries) Charges, net

The table below (in thousands) outlines the special (recoveries) charges, net recorded for the three months ending April 2, 2017:



	Special (Recoveries) Charges, net
	For the quarter ended April 2, 2017
	Energy			Advanced Flow Solutions		Corporate		Total
Brazil closure	$	232		$	—	$	—	$	232
Contingent consideration revaluation	(2,500		)	—		—		(2,500		)
Total special recoveries, net	$	(2,268	)	$	—	$	—	$	(2,268	)

Brazil Closure: On November 3, 2015 the Board of Directors approved the closure and exit of our Brazil manufacturing

operations due to the economic realities in Brazil and the ongoing challenges with our only significant end customer, Petrobras.

CIRCOR Brazil reported substantial operating losses every year since it was acquired in 2011 while the underlying market

conditions and outlook deteriorated. In connection with the closure, we recorded $0.2 million of charges within the Energy segment during the three months ended April 2, 2017, which relates to losses incurred subsequent to our Q1 2016 closure of manufacturing operations. As of April 2, 2017, our remaining Brazil assets were $1.8 million of which $0.9 million relates to assets held for sale, $0.7 million relates to cash, and $0.2 million relates to net third party accounts receivables. The Brazil assets held for sale as of April 2, 2017 are reported within the other current assets caption on our condensed consolidated balance sheet.

Contingent Consideration Revaluation: The fair value of the CFS earn-out decreased $2.5 million from $12.2 million as of December 31, 2016 to $9.7 million as of April 2, 2017. The change in fair value was recorded as a special gain during the three months ended April 2, 2017.

The table below (in thousands) outlines the special charges (recoveries), net recorded for the three months ending April 3, 2016:



	Special Charges (Recoveries), net
	For the quarter ended April 3, 2016
	Energy		Advanced Flow Solutions			Corporate		Total
Acquisition related recoveries	—		(113		)	—		(113		)
Brazil closure	887		—			2		889
Total special charges (recoveries), net	$	887	$	(113	)	$	2	$	776

Acquisition related charges: On April 15, 2015, we acquired Germany-based Schroedahl. In connection with our acquisition of Schroedahl, we recorded $0.1 million of recoveries of acquisition related professional fees during the three months ended April 3, 2016.

Brazil Closure: In connection with the closure, we recorded $0.9 million of charges within the Energy segment during the three months ended April 3, 2016, which primarily related to employee termination costs.

Restructuring Charges, net

The tables below (in thousands) outline the charges (or any recoveries) associated with restructuring actions recorded for the three months ending April 2, 2017 and April 3, 2016. A description of the restructuring actions is provided in the section titled "Restructuring Programs Summary" below.



	Restructuring Charges / (Recoveries)
	As of and for the quarter ended April 2, 2017
	Energy		Advanced Flow Solutions		Corporate		Total
Facility related expenses	$	850	$	107	$	—	$	957
Employee related expenses	172		329		—		501
Total restructuring charges, net	$	1,022	$	436	$	—	$	1,458

Accrued restructuring charges as of December 31, 2016							$	1,618
Total year to date charges, net (shown above)							1,458
Charges paid / settled, net							(1,658		)
Accrued restructuring charges as of April 2, 2017							$	1,418

We expect to make payment or settle the majority of the restructuring charges accrued as of April 2, 2017 during the second quarter of 2017.



	Restructuring Charges / (Recoveries)
	As of and for the quarter ended April 3, 2016
	Energy			Advanced Flow Solutions		Corporate		Total
Facility related expenses (recoveries)	$	(376	)	$	1,400	$	—	$	1,024
Employee related expenses	98			41		—		139
Total restructuring charges, net	$	(278	)	$	1,441	$	—	$	1,163

Accrued restructuring charges as of December 31, 2015								$	663
Total year to date charges, net (shown above)								1,163
Charges paid / settled, net								(1,174		)
Accrued restructuring charges as of April 3, 2016								$	652

Restructuring Programs Summary

As specific restructuring programs are announced, the amounts associated with that particular action may be recorded in periods other than when announced to comply with the applicable accounting rules. For example, 2016 Action’s total cost may be recorded in 2016 and 2017. The amounts shown below reflect the total cost for that restructuring program.

During 2016, we initiated certain restructuring activities, under which we continued to simplify our business ("2016 Actions").

Under these restructurings, we reduced expenses, primarily through reductions in force and closing a number of smaller

facilities.



	2016 Actions Restructuring Charges / (Recoveries), net as of April 2, 2017
	Energy		Advanced Flow Solutions		Total
Facility related expenses - incurred to date	$	1,557	$	201	$	1,758
Employee related expenses - incurred to date	2,631		1,510		4,141
Total restructuring related special charges - incurred to date	$	4,188	$	1,711	$	5,899

In July 2015, we announced the closure of one of the two Corona, California manufacturing facilities ("California

Restructuring"). Under this restructuring, we are reducing certain general, manufacturing and facility related expenses. Charges with this action were finalized in the fourth quarter of 2016.



	California Restructuring Charges, net as of April 2, 2017
	Advanced Flow Solutions
Facility related expenses - incurred to date	$	3,700
Employee related expenses - incurred to date	800
Total restructuring related special charges - incurred to date	$	4,500

Additional Restructuring Charges

During the first quarter of 2016, we recorded restructuring related inventory charges of $1.9 million associated with the closure of manufacturing operations and the exit of the gate, globe and check valves product line in Brazil. As of April 2, 2017, no inventory amounts remain on our balance sheet for the gate, globe and check valves product line.

During the first quarter of 2016, in connection with the restructuring of certain structural landing gear product lines, we recorded inventory related charges of less than $0.1 million within the Advanced Flow Solutions segment. As of April 2, 2017, our remaining structural landing gear product line inventory balance is $0.2 million, which we believe is recoverable based upon our net realizable value analysis.