XML 24 R14.htm IDEA: XBRL DOCUMENT v3.4.0.3
Restructuring and Related Charges
 9 Months Ended
Mar. 31, 2016
Restructuring Charges [Abstract]  
RESTRUCTURING AND RELATED CHARGES
RESTRUCTURING AND RELATED CHARGES
Phase 1
We are implementing restructuring actions in conjunction with our Phase 1 restructuring program to achieve synergies across Kennametal as a result of the Tungsten Materials Business (TMB) acquisition by consolidating operations among both organizations, reducing administrative overhead and leveraging the supply chain. These restructuring actions are expected to be completed by the end of fiscal 2016 and are anticipated to be mostly cash expenditures.
The total pre-tax charges for Phase 1 programs are expected to be up to $60 million, which is expected to be approximately 50 percent Industrial, 45 percent Infrastructure and 5 percent Corporate. Total restructuring and related charges since inception of $58.3 million have been recorded for these Phase 1 programs through March 31, 2016: $30.4 million in Industrial, $25.5 million in Infrastructure and $2.4 million in Corporate.
Phase 2
We are implementing restructuring actions in conjunction with Phase 2 to streamline the Company's cost structure. These initiatives are expected to enhance operational efficiencies through the rationalization of certain manufacturing facilities as well as other employment and cost reduction programs. These restructuring actions are expected to be completed by December of fiscal 2019 and are anticipated to be mostly cash expenditures.
The total pre-tax charges for Phase 2 programs are expected to be in the range of $90 million to $100 million, which is expected to be approximately 85 percent Industrial, 10 percent Infrastructure and 5 percent Corporate. Total restructuring and related charges since inception of $42.3 million have been recorded for these Phase 2 programs through March 31, 2016: $25.3 million in Industrial, $11.8 million in Infrastructure and $5.2 million in Corporate.
Phase 3
We are implementing restructuring actions in conjunction with Phase 3. These initiatives are expected to enhance operational efficiencies through an enterprise-wide cost reduction program as well as the consolidation of certain manufacturing facilities. These restructuring actions are expected to be completed by March of fiscal 2017 and are anticipated to be mostly cash expenditures.
The total pre-tax charges for Phase 3 programs are expected to be in the range of $40 million to $45 million, which is expected to be approximately 55 percent Industrial, 40 percent Infrastructure and 5 percent Corporate. Total restructuring and related charges since inception of $14.5 million have been recorded for these Phase 3 programs through March 31, 2016: $8.4 million in Industrial, $4.5 million in Infrastructure and $1.6 million in Corporate.
Combined
We have recorded restructuring and related charges of $14.0 million and $16.7 million for the three months ended March 31, 2016 and 2015, respectively. Of these amounts, restructuring charges totaled $7.5 million and $15.7 million, respectively. Restructuring charges of $0.4 million during the three months ended March 31, 2016 were charges related to inventory and were recorded in cost of goods sold. Restructuring-related charges of $1.1 million and $0.3 million were recorded in cost of goods sold and $5.4 million and $0.7 million in operating expense for the three months ended March 31, 2016 and 2015, respectively.
We have recorded restructuring and related charges of $38.0 million and $37.1 million for the nine months ended March 31, 2016 and 2015, respectively. Of these amounts, restructuring charges totaled $20.1 million and $24.4 million, of which $0.1 million and $0.3 million were charges related to inventory and were recorded in cost of goods sold, respectively. Restructuring-related charges of $4.7 million and $6.5 million were recorded in cost of goods sold and $13.2 million and $6.2 million in operating expense for the nine months ended March 31, 2016 and 2015, respectively.
The restructuring accrual is recorded in other current liabilities in our condensed consolidated balance sheet and the amount attributable to each segment is as follows:
(in thousands)
June 30, 2015
 
Expense
 
Asset Write-Down
 
Translation
 
Cash Expenditures
 
March 31, 2016
Industrial
 
 
 
 
 
 
 
 
 
 
 
Severance
$
13,456

 
$
12,158

 
$
—

 
$
58

 
$
(17,659
)
 
$
8,013

Facilities
—

 
930

 
(780
)
 
—

 
(146
)
 
4

Other
28

 
156

 
—

 
(1
)
 
(12
)
 
171

Total Industrial
$
13,484

 
$
13,244

 
$
(780
)
 
$
57

 
$
(17,817
)
 
$
8,188

 
 
 
 
 
 
 
 
 
 
 
 
Infrastructure
 
 
 
 
 
 
 
 
 
 
 
Severance
$
7,173

 
$
4,053

 
$
—

 
$
19

 
$
(5,886
)
 
$
5,359

Facilities
131

 
2,775

 
(2,775
)
 
—

 
(101
)
 
30

Other
—

 
52

 
—

 
—

 
3

 
55

Total Infrastructure
$
7,304

 
$
6,880

 
$
(2,775
)
 
$
19

 
$
(5,984
)
 
$
5,444

Total
$
20,788

 
$
20,124

 
$
(3,555
)
 
$
76

 
$
(23,801
)
 
$
13,632


(in thousands)
June 30, 2014
 
Expense
 
Asset Write-Down
 
Other (2)
 
Translation
 
Cash Expenditures
 
March 31, 2015
Industrial
 
 
 
 
 
 
 
 
 
 
 
 
 
Severance
$
5,815

 
$
11,565

 
$
—

 
$
—

 
$
(364
)
 
$
(7,312
)
 
$
9,704

Facilities
444

 
1,307

 
(1,261
)
 
—

 
(31
)
 
(459
)
 
—

Other
67

 
37

 
—

 
—

 
(2
)
 
(102
)
 
—

Total Industrial
$
6,326

 
$
12,909

 
$
(1,261
)
 
$
—

 
$
(397
)
 
$
(7,873
)
 
$
9,704

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Infrastructure
 
 
 
 
 
 
 
 
 
 
 
 
 
Severance
$
2,458

 
$
10,813

 
$
—

 
$
(459
)
 
$
(350
)
 
$
(6,749
)
 
$
5,713

Facilities
190

 
661

 
(522
)
 
—

 
(16
)
 
(279
)
 
34

Other
28

 
6

 
—

 
—

 
(3
)
 
(31
)
 
—

Total Infrastructure
$
2,676

 
$
11,480

 
$
(522
)
 
$
(459
)
 
$
(369
)
 
$
(7,059
)
 
$
5,747

Total
$
9,002

 
$
24,389

 
$
(1,783
)
 
$
(459
)
 
$
(766
)
 
$
(14,932
)
 
$
15,451


(2) Special termination benefit charge for one of our U.S.-based benefit pension plans resulting from a plant closure - see Note 10.