Impairment and Restructuring Charges

3 Months Ended

Sep. 30, 2021

Note 13 - Impairment and Restructuring Charges

Impairment and restructuring charges by segment are comprised of the following:

For the three months ended September 30, 2021:


	Mobile Industries		Process Industries		Unallocated Corporate		Total

Severance and related benefit costs	$	2.2	$	0.3	$	—	$	2.5
Exit costs	0.4		—		—		0.4
Total	$	2.6	$	0.3	$	—	$	2.9

For the nine months ended September 30, 2021:


	Mobile Industries		Process Industries		Unallocated Corporate		Total
Impairment charges	$	1.1	$	3.4	$	—	$	4.5
Severance and related benefit costs	2.2		0.9		—		3.1
Exit costs	0.6		—		—		0.6
Total	$	3.9	$	4.3	$	—	$	8.2

For the three months ended September 30, 2020:


	Mobile Industries		Process Industries		Unallocated Corporate		Total

Severance and related benefit costs	$	5.9	$	5.6	$	0.4	$	11.9
Exit costs	0.1		—		—		0.1
Total	$	6.0	$	5.6	$	0.4	$	12.0

For the nine months ended September 30, 2020:


	Mobile Industries		Process Industries		Unallocated Corporate		Total
Impairment charges	$	—	$	0.1	$	—	$	0.1
Severance and related benefit costs	7.5		9.8		0.5		17.8
Exit costs	0.4		0.4		—		0.8
Total	$	7.9	$	10.3	$	0.5	$	18.7

The following discussion explains the impairment and restructuring charges recorded for the periods presented; however, it is not intended to reflect a comprehensive discussion of all amounts in the tables above.

Coronavirus ("COVID-19") Pandemic Cost Reduction Initiatives:

During the three months and nine months ended September 30, 2020, the Company recorded $9.5 million and $11.5 million, respectively, in severance and related benefit costs to eliminate approximately 200 salaried positions to align then current employment levels with customer demand. Of the $9.5 million charge, $4.9 million related to the Mobile Industries segment, $4.2 million related to the Process Industries segment and $0.4 million related to Unallocated Corporate. Of the $11.5 million charge, $5.5 million related to the Mobile Industries segment, $5.6 million related to the Process Industries segment and $0.4 million related to Unallocated Corporate.

Note 13 - Impairment and Restructuring Charges (continued)

Mobile Industries:

On July 19, 2021, the Company announced the closure of its bearing manufacturing facility in Villa Carcina, Italy. The Company will be transferring the manufacturing of its single-row tapered roller bearing production to other bearing facilities in Europe, Asia and the United States. The Company expects to complete the closure by June of 2022 and is expected to affect approximately 110 employees. The Company expects to incur approximately $9 million to $11 million of expenses related to this closure. During the three months ended September 30, 2021, the Company recorded $2.2 million in severance and related benefits related to this closure. Ahead of this announcement, the Company reviewed assets for impairment. As a result, the Company recorded impairment charges of $1.0 million during the three months ended June 30, 2021. The Company has incurred cumulative pretax costs related to this closure of $5.4 million as of September 30, 2021, including rationalization costs recorded in cost of products sold.

On October 16, 2019, the Company announced the reorganization of its bearing manufacturing facility in Gaffney, South Carolina. The Company transferred its high-volume bearing production and roller production to other Timken manufacturing facilities in the United States. The transfer of these operations was substantially completed by the end of the third quarter of 2020 and affected approximately 150 employees. The Company expected to incur approximately $8 million to $10 million of pretax costs in total related to this reorganization. During the nine months ended September 30, 2020, the Company recognized severance and related benefits of $0.3 million and exit costs of $0.4 million related to this reorganization. The Company incurred cumulative pretax costs related to this reorganization of $7.8 million as of September 30, 2021, including rationalization costs recorded in cost of products sold.

Process Industries:

On February 4, 2020, the Company announced the closure of its chain manufacturing facility in Indianapolis, Indiana. This facility was part of the Diamond Chain Company ("Diamond Chain") acquisition completed on April 1, 2019. The Company will be transferring the manufacturing of its Diamond Chain product line to its chain facility in Fulton, Illinois. The chain plant is expected to cease operations by the end of the fourth quarter of 2021 and is expected to affect approximately 240 employees. The Company expects to hire approximately 130 full-time positions in Fulton, Illinois and expects to incur approximately $10 million to $12 million of expenses related to this closure. During the three months ended September 30, 2021 and September 30, 2020, the Company recorded severance and related benefit costs of $0.3 million and $0.3 million, respectively, related to this closure. During the nine months ended September 30, 2021 and September 30, 2020, the Company recorded severance and related benefit costs of $0.9 million and $2.6 million, respectively, related to this closure. The Company has incurred cumulative pretax costs related to this closure of $9.6 million as of September 30, 2021, including rationalization costs recorded in cost of products sold.

On September 3, 2020, the Company announced the reorganization of its bearing plant in Canton, Ohio. The Company will be transferring production for certain product lines to other Timken locations in order to streamline resources and better align capacity with demand. The transfer of these operations is expected to occur by 2022 and is expected to affect approximately 40 employees. The Company expects to incur approximately $2.0 million to $2.5 million of pretax costs related to this reorganization. During the three months ended September 30, 2020, the Company recognized severance and related benefits of $0.6 million related to this reorganization. The Company has incurred cumulative pretax costs related to this reorganization of $1.2 million as of September 30, 2021, including rationalization costs recorded in cost of products sold.

In addition, the Company recorded impairment charges of $3.3 million related to certain engineering-related assets used in the business during the nine months ended September 30, 2021. Management concluded no further investment would be made in these assets and as a result, reduced the value to zero.

Note 13 - Impairment and Restructuring Charges (continued)

Consolidated Restructuring Accrual:

The following is a rollforward of the consolidated restructuring accrual for the nine months ended September 30, 2021 and twelve months ended December 31, 2020:


	September 30, 2021		December 31, 2020
Beginning balance, January 1	$	8.0	$	2.7
Expense	3.7		20.8
Payments	(3.8)		(15.5)
Ending balance	$	7.9	$	8.0

The restructuring accrual at September 30, 2021 was included in other current liabilities on the Consolidated Balance Sheets.