Restructuring Charges and Other Exit-Related Costs

The Company has implemented a number of restructuring initiatives designed to reduce operating expenses and improve profitability and to achieve further integration and synergistic cost efficiencies in its operating platform. The restructuring charges incurred by the Company during the periods presented pertain to three separate plans: the plans announced in the first quarter of fiscal 2014 (the “Q1’14 Plan”), the Q1’15 Plan and the Q2'15 Plan.

The Q1'14 Plan was designed to reduce the Company's annual operating expenses through headcount reductions, productivity improvements, procurement savings and other operational efficiencies. The Q1'15 Plan included additional productivity initiatives to improve profitability through a combination of revenue drivers and cost reduction initiatives.

At the end of the second quarter of fiscal 2015, the Company commenced additional restructuring and exit-related initiatives by undertaking strategic actions consisting of idling underutilized assets at AMR and initiating the closure of seven auto parts stores to align the Company's business to the prevalent market conditions. The Company expanded these initiatives in April 2015, and also announced the integration of the MRB and APB Businesses into the combined AMR platform, in order to achieve operational synergies and reduce the Company's annual operating expenses, primarily selling, general and administrative expenses, through headcount reductions, reducing organizational layers, consolidating shared service functions and other non-headcount measures. Additional cost savings and productivity improvement initiatives, including additional reductions in personnel, savings from procurement activities, streamlining of administrative and supporting services functions, and adjustments to our operating capacity through facility closures, were identified and initiated in November 2015 and in February 2016. Collectively, these initiatives are referred to as the Q2'15 Plan.

The Company incurred restructuring charges of $3 million and $5 million during the three and six months ended February 29, 2016, respectively, and $2 million and $3 million during the three and six months ended February 28, 2015, respectively. The remaining charges relating to these initiatives are expected to be substantially incurred by the end of fiscal 2017. The significant majority of the restructuring charges require the Company to make cash payments.

In addition to the restructuring charges recorded related to these initiatives, in the second quarter of fiscal 2016 and 2015 the Company incurred other exit-related costs consisting of long-lived asset impairments and accelerated depreciation due to shortened useful lives of long-lived assets, including from abandonment, in connection with site closures and idled equipment.

Restructuring charges and other exit-related costs were comprised of the following (in thousands):



	Three Months Ended February 29, 2016						Three Months Ended February 28, 2015
	All Other Plans		Q2’15 Plan		Total Charges		All Other plans		Q2’15 Plan		Total Charges
Restructuring charges:
Severance costs	$	—	$	3,185	$	3,185	$	371	$	540	$	911
Contract termination costs	35		12		47		56		79		135
Other restructuring costs	—		—		—		880		93		973
Total restructuring charges	35		3,197		3,232		1,307		712		2,019
Other exit-related costs:
Asset impairments and accelerated depreciation	—		3,008		3,008		—		6,352		6,352
Total other exit-related costs	—		3,008		3,008		—		6,352		6,352
Total restructuring charges and other exit-related costs	$	35	$	6,205	$	6,240	$	1,307	$	7,064	$	8,371

Restructuring charges and other exit-related costs included in continuing operations					$	5,291					$	5,394
Restructuring charges and other exit-related costs included in discontinued operations					$	949					$	2,977



	Six Months Ended February 29, 2016						Six Months Ended February 28, 2015
	All Other Plans		Q2’15 Plan		Total Charges		All Other Plans		Q2’15 Plan		Total Charges
Restructuring charges:
Severance costs	$	—	$	4,346	$	4,346	$	398	$	540	$	938
Contract termination costs	125		657		782		309		79		388
Other restructuring costs	—		—		—		1,223		93		1,316
Total restructuring charges	125		5,003		5,128		1,930		712		2,642
Other exit-related costs:
Asset impairments and accelerated depreciation	—		3,008		3,008		—		6,352		6,352
Total other exit-related costs	—		3,008		3,008		—		6,352		6,352
Total restructuring charges and other exit-related costs	$	125	$	8,011	$	8,136	$	1,930	$	7,064	$	8,994

Restructuring charges and other exit-related costs included in continuing operations					$	7,216					$	5,987
Restructuring charges and other exit-related costs included in discontinued operations					$	920					$	3,007



	All Other Plans		Q2'15 Plan		Total
Total restructuring charges to date	$	7,886	$	13,626	$	21,512
Total expected restructuring charges	$	7,941	$	14,030	$	21,971

The following illustrates the reconciliation of the restructuring liability by major type of costs for the six months ended February 29, 2016 (in thousands):



	All Other Plans									Q2’15 Plan									All Plans
	Balance 8/31/2015		Charges		Payments and Other			Balance 2/29/2016		Balance 8/31/2015		Charges		Payments and Other			Balance 2/29/2016		Total Charges to Date		Total Expected Charges
Severance costs	$	—	$	—	$	—		$	—	$	1,226	$	4,346	$	(2,061	)	$	3,511	$	14,582	$	14,646
Contract termination costs	362		125		(388		)	99		1,320		657		(702		)	1,275		3,248		3,643
Other restructuring costs	—		—		—			—		—		—		—			—		3,682		3,682
Total	$	362	$	125	$	(388	)	$	99	$	2,546	$	5,003	$	(2,763	)	$	4,786	$	21,512	$	21,971

Due to the individual immateriality of the activity and liability balances for each of the Q1'14 Plan and Q1'15 Plan, the disclosure of restructuring activity and the reconciliation of the restructuring liability for these two plans is provided in the aggregate ("All Other Plans").

Restructuring charges and other exit-related costs by reportable segment and discontinued operations were as follows (in thousands):



	Three Months Ended				Six Months Ended					Total Charges to Date		Total Expected Charges
	2/29/2016		2/28/2015		2/29/2016			2/28/2015		Total Charges to Date		Total Expected Charges
Restructuring charges:
Auto and Metals Recycling	$	2,421	$	1,645	$	4,343		$	2,244	$	15,141	$	15,593
Unallocated (Corporate)	809		63		812			57		4,819		4,826
Discontinued operations	2		311		(27		)	341		1,552		1,552
Total restructuring charges	3,232		2,019		5,128			2,642		21,512		21,971
Other exit-related costs:
Auto and Metals Recycling	2,061		3,686		2,061			3,686		6,463
Discontinued operations	947		2,666		947			2,666		3,613
Total other exit-related costs	3,008		6,352		3,008			6,352		10,076
Total restructuring charges and other exit-related costs	$	6,240	$	8,371	$	8,136		$	8,994	$	31,588

The Company does not allocate restructuring charges and other exit-related costs to the segments’ operating results because management does not include this information in its measurement of the performance of the operating segments.