Note 6: Restructuring Activities

During fiscal 2015, the Company implemented a headcount reduction plan within its South America segment. The headcount reductions were in response to the economic slowdown in Brazil and reflect the Company’s objective to maintain profitability in the segment despite lower sales volume.

During fiscal 2014, the Company approved a plan to close its McHenry, Illinois manufacturing facility, reflecting its focus on operating scale manufacturing facilities to improve overall competitiveness and profitability. The Company is in the process of transferring the facility’s production to other existing North America segment manufacturing facilities.

During fiscal 2013, the Company initiated restructuring activities within its Europe segment. The restructuring activities have included exiting certain non-core product lines based upon Modine’s global product strategy, reducing manufacturing costs, consolidating production facilities, implementing headcount reductions, and disposing of and selling certain underperforming or non-strategic assets. The activities were designed to align the cost structure of the segment with its strategic focus on the commercial vehicle, off-highway, automotive component, and engine product markets, while improving gross margin and return on average capital employed.

Restructuring and repositioning expenses for fiscal 2015, 2014, and 2013 were as follows:

	Years ended March 31,
	2015		2014		2013
Employee severance and related benefits	$	1.2	$	14.8	$	14.9
Accelerated depreciation		-		4.3		-
Other restructuring and repositioning expenses		3.5		1.3		2.1
Total	$	4.7	$	20.4	$	17.0

During fiscal 2015, 2014, and 2013, the Company recorded $4.7 million, $16.1 million and $17.0 million, respectively, of restructuring and repositioning expenses as restructuring expenses in the consolidated statement of operations. During fiscal 2014, the Company recorded $4.3 million of restructuring and repositioning expenses within cost of sales in the consolidated statement of operations.

The Company accrues severance in accordance with its written plans, procedures, and relevant statutory requirements. Changes in accrued severance were as follows:

	Years ended March 31,
	2015			2014
Beginning balance	$	19.4		$	11.6
Additions		1.2			14.8
Payments		(7.3	)		(7.8	)
Effect of exchange rate changes		(3.4	)		0.8
Ending balance	$	9.9		$	19.4

During fiscal 2014, the Company recorded asset impairment charges totaling $3.2 million, including $2.0 million within its Europe segment, primarily due to a manufacturing facility in Germany that the Company plans to close, and $1.2 million within its North America segment, related to the planned closure of its McHenry, Illinois manufacturing facility. During fiscal 2013, the Company recorded asset impairment charges of $24.1 and $1.8 million within its Europe and North America segments, respectively, to reduce the carrying values of certain facilities held for sale to their estimated fair values, less costs to sell.

During fiscal 2015, the Company sold a wind tunnel within its Europe segment, which was previously reported as an asset held for sale, for cash proceeds of $5.8 million and recognized a gain of $3.2 million. Also during fiscal 2015, the Company reclassified $4.7 million of its assets held for sale to property, plant and equipment, related to a facility in the Europe segment that is no longer being actively marketed for sale. At March 31, 2015 and 2014, assets held for sale of $3.2 million and $11.6 million, respectively, were included in other noncurrent assets and consisted of facilities that the Company is marketing for sale.

In April 2015, the Company announced its intent to close its Washington, Iowa manufacturing facility within the North America segment. As a result of the planned closure, the Company expects to incur approximately $2.0 million of employee severance-related costs during fiscal 2016 and additional restructuring and repositioning expenses during the closure period, as production is transferred to other facilities within the North America segment.