Restructuring and Impairment

6 Months Ended

Jun. 30, 2020

Restructuring and Related Activities [Abstract]

Restructuring and Impairment

Restructuring and Impairment

In the second quarter of 2020, we announced a restructuring plan to exit our STEMCO Brake Products business involving the exit of manufacturing operations related to our Motor Wheel® brake drum and Crewson® brake adjuster brands and the sale of our Lunar® air disc brake product line and related manufacturing facility in Shanghai, China. Additionally, we had a number of smaller restructuring activities at several of our other divisions.

For the quarter and six months ended June 30, 2020, respectively, we recorded $17.5 million and $18.9 million of restructuring and impairment charges. Of these charges, $5.0 million and $4.9 million, respectively, are recorded as cost of sales on our consolidated income statements as they pertain to impairments of inventory, and $12.5 million and $14.0 million, respectively, are recorded in other operating expense on our consolidated income statements for other restructuring and impairment charges.

The exit from our Motor Wheel® brake drum and Crewson® brake adjuster brands resulted in restructuring and impairment charges of $11.1 million in the second quarter of 2020, of which $3.6 million was related to inventory impairment charges, $3.5 million was impairment of intangible assets, and $4.0 million related to severance, contract cancellation costs, and other expenses. Contract cancellation costs, severance and other expenses will result in future cash out flows and are anticipated to be incurred commencing in the third quarter of 2020 and through the fourth quarter of 2020.

In the second quarter of 2020, we entered into an agreement to sell the Lunar® air disc brake business. As a result of this agreement, we recorded the business as held for sale and incurred $2.1 million in impairment charges, of which $1.6 million related to impairment of long-lived assets and $0.5 million related to impairment of inventory. The sale is expected to take place in the third quarter of 2020.

For the quarter and six months ended June 30, 2019, respectively, we recorded $1.0 million and $2.3 million of restructuring and impairment charges. These charges are recorded in other expense on our consolidated income statement.