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 nine months ended September 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 nine months ended September 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 nine months ended September 30, 2015, the Company closed three facilities and eliminated three product lines which resulted in asset impairment charges. In addition, the Company sold and leased back a fourth 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 nine months ended September 30, related to the restructuring activities described above (in thousands):



	Three Months Ended September 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	$	373	$	207	$	580	$	502	$	255	$	757
Industrial & Infrastructure Products	2,429		756		3,185		—		8		8
Total exit activity costs & asset impairments	$	2,802	$	963	$	3,765	$	502	$	263	$	765



	Nine Months Ended September 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	$	1,179	$	677	$	1,856	$	3,247	$	980	$	(6,799	)	$	(2,572	)
Industrial & Infrastructure Products	2,697		2,019		4,716		—		49		—			49
Total exit activity costs & asset impairments	$	3,876	$	2,696	$	6,572	$	3,247	$	1,029	$	(6,799	)	$	(2,523	)

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 nine months ended September 30, (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Cost of sales	$	3,433	$	666	$	5,111	$	4,027
Selling, general, and administrative expense	332		99		1,461		(6,550		)
Net asset impairment and exit activity charges (gains)	$	3,765	$	765	$	6,572	$	(2,523	)

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	2,696			1,029
Cash payments	(2,182		)	(1,083		)
Balance at September 30	$	1,117		$	521