Realignment Costs

During fiscal year 2017, as part of AZZ's ongoing efforts to optimize cost and effectiveness, the Company undertook a review of its operations to optimize the financial performance of its operating assets. As a result, the Company recognized $8.0 million of realignment charges in the second quarter of fiscal 2017. A total of $6.7 million was included in Cost of Sales for the disposition and write off of certain fixed assets within the Metal Coatings Segment, including the cost of closing two plants, the write off of certain assets related to the conversion of a third plant from a standard galvanizing plant to a galvanized rebar plant, and the cost of writing off certain other functionally obsolete assets across other galvanizing plants during the second quarter. The Company also reserved $1.3 million in Selling, General and Administrative Expense for realignment costs related to one-time employee severance associated with changes needed to improve management efficiency in the Energy and Metal Coatings Segments.

During fiscal year 2016, the Company reviewed its available capacity within the Energy segment and recorded realignment costs related to severance associated with consolidating capacity at various facilities. Additionally we reserved for the disposition and write-off of certain fixed assets in connection with the capacity consolidation. The total cost related to the capacity consolidation is estimated to be $0.9 million. A total of $0.2 million of severance costs and $0.2 million of costs for the disposition of certain fixed assets are included in Selling, General and Administrative Expenses. A total of $0.2 million of severance costs and $0.3 million of costs for the disposition of certain fixed assets are included in Cost of Sales.

The following table provides a summary of the realignment activities and related liabilities recorded in accrued liabilities (in thousands):



Balance at February 28, 2015	$	456
Realignment costs accrued	437
Cash payments	(832		)
Balance at February 29, 2016	$	61
Realignment costs accrued	1,260
Cash payments	(1,014		)
Balance at February 28, 2017	$	307
Realignment costs accrued	—
Cash payments	(307		)
Balance at February 28, 2018	$	—