Exit and Disposal Activities

The Company has initiated various exit and disposal activities including, but not limited to, the matters described below. Employee separation expenses are comprised of severance, outplacement and retention bonus payments. Other costs include expenses associated with asset write-downs, terminating contractual arrangements, costs to prepare facilities for closure, and costs to move equipment and products to other facilities.

Manufacturing Rationalization and Relocation Initiatives

The Company's Board of Directors approved several initiatives relating to the transfer of product manufacturing and the consolidation of certain manufacturing facilities within the RCH and CAS segments (collectively, the "Manufacturing Rationalization & Relocation Initiatives").

The Company expects that the range of total costs of the Manufacturing Rationalization & Relocation Initiatives is as follows:



	Low⁽¹⁾		High ⁽¹⁾
	(Dollar amounts in millions)
Employee-related costs	$	9.0	$	10.0
Other costs, including machinery and equipment relocation and installation	9.0		10.0
	$	18.0	$	20.0


(1)	The range of total estimated exit and disposal activities by segment are as follows:



	Low		High
	(Dollar amounts in millions)
RCH	$	16.4	$	18.4
CAS	1.6		1.6
	$	18.0	$	20.0

Cash expenditures began in the second quarter of 2013 and are expected to continue through fiscal year 2015. In connection with the Manufacturing Rationalization & Relocation Initiatives, the Company has incurred cumulative costs of approximately $17.8 million (of which approximately $16.2 million and $1.6 million were recorded in the RCH and CAS segments, respectively).

The following table sets forth the changes to the liability for the Manufacturing Rationalization & Relocation Initiatives during the nine months of 2015:



	Severance			Other Costs			Total
	(Dollar amounts in millions)

Balance, December 31, 2014	$	5.2		$	—		$	5.2
Provision ⁽¹⁾	(0.1		)	2.6			2.5
Payments	(4.8		)	(2.6		)	(7.4		)
Balance, September 26, 2015	$	0.3		$	—		$	0.3


(1)	Approximately $2.1 million and $0.4 million of costs were recorded in the RCH and CAS segments, respectively, during the nine months of 2015.

Warehousing and Distribution Consolidation

In connection with the Company's efforts to optimize supply chain performance, the Company's Board of Directors approved entry into a five-year agreement with a third party logistics service provider to outsource certain warehousing and distribution activities in the Company's North American operating segments and facilitate the consolidation of North American warehousing distribution centers (the "Warehousing & Distribution Consolidation"). See below for a discussion of the current status of this agreement.

Cumulative costs incurred in connection with the Warehousing & Distribution Consolidation include severance and other costs of approximately $2.7 million, of which approximately $1.7 million, $0.6 million, and $0.4 million were recorded in the SCS, ERG, and combined AVC segments, respectively.

The following table sets forth the changes to the liability for the Warehousing and Distribution Consolidation during the nine months of 2015:



	Severance		Other Costs			Total
	(Dollar amounts in millions)

Balance, December 31, 2014	$	—	$	0.5		$	0.5
Provision ⁽¹⁾	—		(0.3		)	(0.3		)
Payments	—		(0.2		)	(0.2		)
Balance, September 26, 2015	$	—	$	—		$	—


(1)	All activity during the nine months of 2015 was recorded in the SCS segment.

In October 2015, it was determined that the Company would assume control of certain U.S. dedicated distribution centers that had been operated by a third party logistics service provider since 2013. Refer to Note G, "Commitments and Contingencies - Assumption of Distribution Centers", for further detail surrounding this transaction.

Subsidiary Combinations

The Company has combined, or is in the process of combining, the operations of certain subsidiaries in order to improve overall operational efficiencies, reduce costs, and provide potential for greater revenue growth ("Subsidiary Combinations"). On July 28, 2015, the Company’s Board of Directors approved a restructuring plan designed to merge the operations of Gefen into Core Brands, including the exit from certain product lines, which commenced during the third quarter of 2015 (the "additional subsidiary combination"). During the third quarter of 2015, the Company recorded approximately $6.5 million of inventory charges, including expected purchase order cancellations, and approximately $0.8 million of severance and other charges associated with this additional subsidiary combination.

The Company currently expects the estimated total costs related to one time termination benefits and other costs associated with Subsidiary Combinations, including the restructuring of Gefen into Core Brands, to be approximately $26.2 million to $27.2 million. Total expected costs by segment are as follows:



	Low		High
	(Dollar amounts in millions)
SCS	$	0.9	$	0.9
RCH	1.3		1.3
AVC	24.0		25.0
	$	26.2	$	27.2

In connection with Subsidiary Combinations, including the additional subsidiary combination, the Company has incurred cumulative costs of approximately $25.2 million, of which approximately $0.9 million, $1.3 million and $23.0 million was recorded in the SCS, RCH, and combined AVC segments, respectively. These costs consist of one time termination benefits of approximately $5.4 million, approximately $10.0 million in costs to reduce inventory values for certain products to their expected net realizable amount, and facility exit and other costs of approximately $9.8 million.

The following table sets forth the changes to the liability for Subsidiary Combinations during the nine months of 2015:



	Severance			Other Costs			Total
	(Dollar amounts in millions)

Balance, December 31, 2014	$	0.7		$	1.0		$	1.7
Provision ^{(1) (2)}	0.4			0.6			1.0
Payments	(0.6		)	(0.9		)	(1.5		)
Other	—			(0.2		)	(0.2		)
Balance, September 26, 2015	$	0.5		$	0.5		$	1.0


(1)	All costs during the nine months of 2015 were recorded in the AVC segments.


(2)	Excludes approximately $6.5 million of inventory charges, including expected purchase order cancellations, recorded during the third quarter of 2015 as noted previously.

In the event the Company elects to further consolidate subsidiaries, the Company may incur additional costs related to severance and other costs.

Best Restructuring

In 2011, management approved a plan to reduce costs and improve production efficiencies at Best, one of the Company's AQH subsidiaries, including transferring certain operations from Italy to Poland (the "Best Restructuring"). In the third quarter of 2015, management approved further restructuring costs for this business (the "additional restructuring actions"). Approximately $2.5 million of severance costs was recorded in the third quarter of 2015 in connection with the additional restructuring actions. The total expected costs related to contractual termination benefits and other costs associated with the Best Restructuring, including the additional restructuring actions, are estimated to be approximately $21.0 million. In connection with the Best Restructuring, including the additional restructuring actions, the Company has incurred cumulative costs of approximately $20.5 million, consisting of contractual termination benefits of approximately $20.1 million and other costs of approximately $0.4 million. As the Company continues to evaluate Best, it is possible that the Company will take future restructuring actions and additional expenses may be incurred.

The following table sets forth the changes to the liability for the Best Restructuring during the nine months of 2015:



	Severance			Other Costs		Total
	(Dollar amounts in millions)

Balance, December 31, 2014	$	0.4		$	—	$	0.4
Provision	2.9			—		2.9
Payments	(0.7		)	—		(0.7		)
Balance, September 26, 2015	$	2.6		$	—	$	2.6

CAS Segment Consolidation

On May 4, 2015, the Company’s Board of Directors approved a restructuring plan designed to consolidate production activities in its North American and European operations in the CAS segment, and exit from certain product lines which have been determined to have limited strategic importance or to be competitively disadvantaged. The plan anticipates that the production facilities at two North American locations will be discontinued, with the product lines from those facilities transferred to other North American locations, or discontinued. Furthermore, the CAS segment's manufacturing operations in Mexico will be substantially reduced and the operation of the manufacturing facility is in the process of being transferred to the Company's RCH segment to be used in that segment's production activities. It is expected that the restructuring plan, which commenced in the second quarter of 2015, will be in process through the second quarter of 2016. Total initial expected exit costs to be incurred in connection with the plan were expected to be in the range of approximately $10.0 million to $15.0 million; however, during the third quarter of 2015, based upon certain operating decisions made during the third quarter, there was a change in estimate of the expected exit costs, principally due to a reduction in the estimated recoverability of certain inventory, resulting in a revised range of approximately $12.0 million to $17.0 million. Approximately $2.8 million and $7.6 million was recorded in the third quarter and nine months of 2015, respectively, comprised principally of employee separation, facility abandonment, and inventory write-offs during the consolidation period.

The following table sets forth the changes to the liability for the CAS Segment Consolidation during the nine months of 2015:



	Severance			Other Costs			Total
	(Dollar amounts in millions)

Balance, December 31, 2014	$	—		$	—		$	—
Provision ⁽¹⁾	2.7			1.0			3.7
Payments	(1.2		)	(1.0		)	(2.2		)
Other	(0.1		)	0.2			0.1
Balance, September 26, 2015	$	1.4		$	0.2		$	1.6


(1)	Excludes approximately $3.9 million of inventory charges recorded during the nine months of 2015.

Other Restructuring Activities

As noted previously, the Company has transferred the management of its UK commercial HVAC subsidiary from the CAS segment to the RCH segment. As part of this transfer, the Company's Board of Directors approved a restructuring plan related to the UK commercial HVAC subsidiary including a reduction of headcount, the closure of one facility, and the transfer of certain operations to other facilities within the RCH segment. Costs to be incurred in connection with this plan are expected to be in the range of approximately $5.0 million to $6.0 million, comprised principally of employee separation and lease obligations. The Company has recorded severance and other costs in the nine months of 2015 of approximately $2.8 million, consisting of severance of approximately $1.8 million and other costs of approximately $1.0 million related to these activities.

During the nine months of 2015, the Company also recorded inventory write-offs of approximately $0.9 million related to the discontinuation of a certain legacy product line at an AVC entity.

The following table sets forth the changes to the liability for other restructuring activities during the nine months of 2015:



	Severance			Other Costs			Total
	(Dollar amounts in millions)

Balance, December 31, 2014	$	—		$	—		$	—
Provision ^{(1) (2)}	1.8			0.8			2.6
Payments	(1.3		)	(0.5		)	(1.8		)
Balance, September 26, 2015	$	0.5		$	0.3		$	0.8


(1)	Approximately $2.8 million and $0.9 million of costs were recorded in the RCH and AVC segments, respectively, during the nine months of 2015.


(2)	Excludes approximately $1.1 million of inventory charges recorded during the nine months of 2015.

Summary of Exit and Disposal Activities

The following table outlines amounts recorded within the unaudited condensed consolidated statement of operations associated with the Company's exit and disposal activities for the third quarter of 2015 and 2014:



	For the third quarter of 2015						For the third quarter of 2014
	SG&A		COGS		Total		SG&A		COGS		Total
	(Dollar amounts in millions)

Manufacturing Rationalization & Relocation Initiatives	$	—	$	0.1	$	0.1	$	—	$	1.1	$	1.1
Subsidiary Combinations	0.8		6.5		7.3		2.1		0.3		2.4
CAS Segment Consolidation	0.2		2.6		2.8		—		—		—
Best Restructuring	0.6		1.9		2.5		—		—		—
Other restructuring activities	0.1		0.1		0.2		—		—		—
Total	$	1.7	$	11.2	$	12.9	$	2.1	$	1.4	$	3.5



	For the nine months of 2015								For the nine months of 2014
	SG&A		COGS			Total			SG&A		COGS		Total
	(Dollar amounts in millions)

Manufacturing Rationalization & Relocation Initiatives	$	0.1	$	2.4		$	2.5		$	—	$	3.8	$	3.8
Warehousing & Distribution Consolidation	—		(0.3		)	(0.3		)	0.3		0.6		0.9
Subsidiary Combinations	1.0		6.5			7.5			2.6		0.6		3.2
CAS Segment Consolidation	0.7		6.9			7.6			—		—		—
Best Restructuring	0.6		2.3			2.9			—		—		—
Other restructuring activities	0.5		3.2			3.7			—		—		—
Total	$	2.9	$	21.0		$	23.9		$	2.9	$	5.0	$	7.9