EXIT ACTIVITY COSTS AND ASSET IMPAIRMENTS

The Company’s business strategy has been formulated to effect a transformation of its operations and improve financial results over a five year period. In 2015, the first year of this planned transformation, an 80/20 simplification initiative commenced across many of our business units. This on-going initiative, in part, focuses the Company’s internal resources on further increasing the value provided to our customers.

A result of this initiative was the identification of low-volume, internally-produced products which have been or will be outsourced or discontinued. During the six months ended June 30, 2016, charges resulted from this identification which relate to the write-down of inventory and impairment of machinery and equipment associated with either discontinued product lines or the reduction of manufactured goods offered within a product line. These assets were written down to their sale or scrap value, and were subsequently sold or disposed of. Exit activity costs were also incurred during the six months ended June 30, 2016 which relate to contract termination costs, severance costs, and other moving and closing costs. These costs were the result of the closing and consolidation of facilities, relocation of inventory and equipment at those facilities and the reduction of workforce associated with the discontinued products and closed facilities.

During the six months ended June 30, 2015, the Company closed two facilities and eliminated three product lines which resulted in asset impairment charges. In addition, the Company sold and leased back a facility, which resulted in a gain.

The following tables set forth the asset impairment charges, exit activity costs and gain on facilities sold in conjunction with these efforts, incurred by segment during the three and six months ended June 30, related to the restructuring activities described above (in thousands):



	Three Months Ended June 30,
	2016						2015
	Inventory write-downs &/or asset impairment charges		Exit activity costs		Total		Inventory write-downs &/or asset impairment charges		Exit activity costs		Total
Residential Products	$	118	$	140	$	258	$	2,637	$	614	$	3,251
Industrial & Infrastructure Products	46		805		851		—		41		41
Total exit activity costs & asset impairments	$	164	$	945	$	1,109	$	2,637	$	655	$	3,292



	Six Months Ended June 30,
	2016						2015
	Inventory write-downs &/or asset impairment charges		Exit activity costs		Total		Inventory write-downs &/or asset impairment charges		Exit activity costs		Gain on sale leaseback			Total
Residential Products	$	806	$	470	$	1,276	$	2,745	$	725	$	(6,799	)	$	(3,329	)
Industrial & Infrastructure Products	268		1,263		1,531		—		41		—			41
Total exit activity costs & asset impairments	$	1,074	$	1,733	$	2,807	$	2,745	$	766	$	(6,799	)	$	(3,288	)

The following table provides a summary of where the asset impairments and exit activity costs (gains) were recorded in the statement of operations for the three and six months ended June 30, (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Cost of sales	$	560	$	3,173	$	1,678	$	3,361
Selling, general, and administrative expense	549		119		1,129		(6,649		)
Net asset impairment and exit activity charges (gains)	$	1,109	$	3,292	$	2,807	$	(3,288	)

The following table reconciles the beginning and ending liability for exit activity costs relating to the Company’s facility consolidation efforts (in thousands):



	2016			2015
Balance at January 1	$	603		$	575
Exit activity costs recognized	1,733			766
Cash payments	(1,527		)	(641		)
Balance at June 30	$	809		$	700