EXIT ACTIVITY COSTS AND ASSET IMPAIRMENTS

The Company has entered its third year of a five year planned transformation strategy formulated to transform its operations and improve its financial results over this five year period. This strategy includes an 80/20 simplification initiative which, 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, low margin, internally-produced products which have been or will be outsourced or discontinued. Portfolio management, another key part of the strategy and a natural adjunct to the 80/20 initiative, is another initiative in which management conducts strategic reviews of our current portfolio for future profitable growth and greater shareholder returns. This initiative has resulted in the sale and exiting of less profitable businesses or products lines in order to enable the Company to re-allocate leadership, time, capital and resources to the highest potential platforms and businesses. Exit activity costs and asset impairment charges were incurred as a result of these initiatives.

Exit activity costs were incurred during the three months ended March 31, 2017 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 three months ended March 31, 2017, asset impairment charges incurred were more than offset by a gain on sale of assets previously impaired in 2016 as a result of businesses and product lines discontinued. Specifically, the exit of both the Company's small European residential solar racking business and the exit of the Company's U.S. bar grating product line, which commenced during the fourth quarter of 2016, transacted sales of assets during the three months ended March 31, 2017 which resulted in a net gain. These exits are expected to be completed in the first half of 2017. During the three months ended March 31, 2017, asset impairment charges were incurred related 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. During the three months ended March 31, 2017, the company closed three facilities as a result of these initiatives.

During the three months ended March 31, 2016, the Company incurred asset impairment charges and exit activity costs resulting from the above initiatives as well.

The following tables set forth the asset impairment charges and exit activity costs in conjunction with these efforts, incurred by segment during the three months ended March 31, related to the restructuring activities described above (in thousands):



	2017							2016
	Inventory write-downs &/or asset impairment recoveries			Exit activity costs		Total		Inventory write-downs &/or asset impairment charges		Exit activity costs		Total
Residential Products	$	(21	)	$	185	$	164	$	688	$	330	$	1,018
Industrial & Infrastructure Products	(896		)	2,656		1,760		222		458		680
Renewable Energy & Conservation	—			1,050		1,050		—		—		—
Corporate	—			28		28		—		—		—
Total exit activity costs & asset impairments	$	(917	)	$	3,919	$	3,002	$	910	$	788	$	1,698

The following table provides a summary of where the asset impairments and exit activity costs were recorded in the statement of operations for the three months ended March 31, (in thousands):



	Three Months Ended March 31,
	2017		2016
Cost of sales	$	994	$	1,118
Selling, general, and administrative expense	2,008		580
Net asset impairment and exit activity charges	$	3,002	$	1,698

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



	2017			2016
Balance at January 1	$	3,744		$	603
Exit activity costs recognized	3,919			788
Cash payments	(4,617		)	(430		)
Balance at March 31	$	3,046		$	961