Restructuring and Related Charges

9 Months Ended

Mar. 31, 2020

FY20 Restructuring Actions

In the June quarter of fiscal 2019, we began implementing the current phase of restructuring associated with our simplification/modernization initiative. These actions are expected to reduce structural costs, improve operational efficiency and position us for long-term profitable growth. These actions are expected to be completed in fiscal 2020 and are expected to be primarily cash expenditures.

The pre-tax charges for these programs are expected to be in the range of $55 million to $60 million, which are expected to be 80 percent Industrial, 15 percent Infrastructure and 5 percent Widia. Total restructuring and related charges since inception of $50.0 million were recorded for this program through March 31, 2020, consisting of: $40.6 million in Industrial; $7.2 million in Infrastructure; and $2.2 million in Widia.

FY21 Restructuring Actions

On July 11, 2019, we announced the initiation of restructuring actions in Germany associated with our simplification/modernization initiative, which are expected to reduce structural costs. We have agreed with local employee representatives to downsize our Essen, Germany operations instead of the previously proposed closure. We are also evaluating the acceleration of other facility closures as part of these restructuring activities. These actions are expected to be completed by the end of fiscal 2021 and are expected to be primarily cash expenditures.

The pre-tax charges for these programs are expected to be in the range of $55 million to $65 million, which is expected to be primarily in the Industrial segment. Total restructuring and related charges since inception of $28.8 million were recorded for this program through March 31, 2020, all of which were recorded in the Industrial segment.

Restructuring and Related Charges Recorded

We recorded restructuring and related charges of $5.8 million and $3.7 million for the three months ended March 31, 2020 and 2019, respectively. Of these amounts, restructuring charges totaled $1.8 million and $2.6 million for the three months ended March 31, 2020 and 2019, respectively, of which $0.2 million were related to inventory and were recorded in cost of goods sold for the three months ended March 31, 2020 and 2019. Restructuring-related charges of $4.0 million and $0.9 million were recorded in cost of goods sold for the three months ended March 31, 2020 and 2019, respectively. Restructuring-related charges of $0.1 million were recorded in operating expense for the three months ended March 31, 2019.

We recorded restructuring and related charges of $65.1 million and $6.8 million for the nine months ended March 31, 2020 and 2019, respectively. Of these amounts, restructuring charges totaled $54.5 million and $5.3 million for the nine months ended March 31, 2020 and 2019, respectively, of which $0.6 million and $0.2 million were related to inventory and were recorded in cost of goods sold for the nine months ended March 31, 2020 and 2019, respectively. Restructuring-related charges of $10.6 million and $1.4 million were recorded in cost of goods sold for the nine months ended March 31, 2020 and 2019, respectively. Restructuring-related charges of $0.1 million were recorded in operating expense for the nine months ended March 31, 2019.

As of March 31, 2020, $24.7 million and $16.2 million of the restructuring accrual is recorded in other current liabilities and other liabilities, respectively, in our condensed consolidated balance sheet. The restructuring accrual of $19.2 million as of June 30, 2019 is recorded in other current liabilities. The amount attributable to each segment is as follows:



(in thousands)	June 30, 2019		Expense		Asset Write-Down			Translation			Cash Expenditures			March 31, 2020
Industrial
Severance	$	8,863	$	49,455	$	—		$	(780	)	$	(25,413	)	$	32,125
Facilities	—		1,857		(1,857		)	—			—			—
Other	35		4		—			(1		)	(22		)	16
Total Industrial	$	8,898	$	51,316	$	(1,857	)	$	(781	)	$	(25,435	)	$	32,141

Widia
Severance	$	2,306	$	342	$	—		$	(28	)	$	(321	)	$	2,299
Facilities	—		41		(41		)	—			—			—
Other	24		—		—			—			—			24
Total Widia	$	2,330	$	383	$	(41	)	$	(28	)	$	(321	)	$	2,323

Infrastructure
Severance	$	7,956	$	2,053	$	—		$	(313	)	$	(3,225	)	$	6,471
Facilities	—		758		(758		)	—			—			—
Other	28		2		—			(1		)	(5		)	24
Total Infrastructure	$	7,984	$	2,813	$	(758	)	$	(314	)	$	(3,230	)	$	6,495
Total	$	19,212	$	54,512	$	(2,656	)	$	(1,123	)	$	(28,986	)	$	40,959