2. SPECIAL (GAINS) AND CHARGES

Special (gains) and charges reported on the Consolidated Statement of Income include the following:



	First Quarter Ended
	March 31
(millions)	2017		2016
Cost of sales
Inventory fair value step-up		$ 1.5		$ -

Special (gains) and charges
Restructuring activities		(0.3)		3.0
Acquisition and integration costs		6.3		2.3
Other		0.2		1.0
Subtotal		6.2		6.3

Total special (gains) and charges		$ 7.7		$ 6.3

For segment reporting purposes, special (gains) and charges are not allocated to reportable segments, which is consistent with the Company’s internal management reporting.

Inventory fair value step-up

The recognition of fair value step-up in Laboratoires Anios (“Anios”) inventory, which is maintained on a FIFO basis, of $1.5 million ($1.1 million after tax) is recorded in cost of sales on the Consolidated Statement of Income. Further information related to the Anios acquisition is included in Note 3.

Restructuring activities

The Company’s restructuring activities are associated with plans to enhance its efficiency and effectiveness and sharpen its competitiveness. Restructuring plans include net costs associated with significant actions involving employee-related severance charges, contract termination costs and asset write-downs and disposals. Employee termination costs are largely based on policies and severance plans, and include personnel reductions and related costs for severance, benefits and outplacement services. These charges are reflected in the quarter when the actions are probable and the amounts are estimable, which typically is when management approves the actions. Contract termination costs include charges to terminate leases prior to the end of their respective terms and other contract terminations. Asset write-downs and disposals include leasehold improvement write-downs, other asset write-downs associated with combining operations and disposal of assets.

Restructuring activities have been included as a component of special (gains) and charges on the Consolidated Statement of Income. Restructuring liabilities have been classified as a component of both other current and other noncurrent liabilities on the Consolidated Balance Sheet. During the first quarter of 2017, restructuring gains and charges were minimal. During the first quarter of 2016, net restructuring charges were $3.0 million ($1.7 million after tax). The restructuring liability balance was $33.6 million and $39.6 million as of March 31, 2017 and December 31, 2016, respectively. The reduction in liability was driven primarily by severance and other cash payments. The remaining accrual is expected to be paid over a period of a few months to several quarters and continues to be funded from operating activities.

Acquisition and integration related costs

The Company’s acquisition and integration costs include $6.3 million ($4.2 million after tax) and $2.3 million ($1.4 million after tax) of acquisition costs, advisory and legal fees, and integration charges for the Anios and Swisher Hygiene Inc. (“Swisher”) acquisitions during the first quarter of 2017 and 2016, respectively. Further information related to the Company’s acquisitions is included in Note 3.