Quarterly report pursuant to Section 13 or 15(d)

Restructuring Charges (Notes)

v3.20.2
Restructuring Charges (Notes)
9 Months Ended
May 31, 2020
Restructuring and Related Activities [Abstract]  
Restructuring and Related Activities Disclosure [Text Block]
Note 3. Restructuring Charges
The Company has undertaken or committed to various restructuring initiatives including workforce reductions; leadership changes; plant consolidations to reduce manufacturing overhead; satellite office closures; the continued movement of production and product sourcing to low-cost alternatives; and the centralization and standardization of certain administrative functions. Liabilities for severance will generally be paid within twelve months, while future lease payments related to facilities vacated as a result of restructuring will be paid over the underlying remaining lease terms. During fiscal 2019, the Company announced a new restructuring plan focused on i) the integration of the Enerpac and Hydratight businesses (Industrial Tools & Service ("IT&S") segment), ii) the strategic exit of certain commodity type services in our North America Services operations (IT&S segment) and iii) driving efficiencies within the overall corporate structure. In the third quarter of fiscal 2020, the Company announced the expansion and revision of this plan, which further simplifies and flattens the Corporate structure through elimination of redundancies between the segment and corporate functions, while enhancing our commercial and marketing processes to become even closer to our customers. Restructuring charges associated with this plan were $2.5 million and $5.6 million in the three and nine months ended May 31, 2020, respectively. The Company recorded total restructuring charges of $1.1 million in both the three and nine months ended May 31, 2019.
The following summarizes restructuring reserve activity for the IT&S reportable segment and corporate (in thousands):
 
 
Nine Months Ended May 31, 2020
 
 
Industrial Tools & Services
 
Corporate
Balance as of August 31, 2019
 
$
2,912

 
$

Restructuring charges
 
4,019

 
1,590

Cash payments
 
(4,265
)
 
(871
)
Other non-cash uses of reserve (1)
 
(556
)
 
(484
)
Impact of changes in foreign currency rates
 
(23
)
 

Balance as of May 31, 2020
 
$
2,087

 
$
235

(1) Majority of non-cash uses of reserve represents accelerated equity vesting with employee severance agreements.
 
 
Nine Months Ended May 31, 2019
 
 
Industrial Tools & Services
 
Corporate
Balance as of August 31, 2018
 
$
1,687

 
$
46

Restructuring charges
 
1,136

 

Cash payments
 
(1,379
)
 
(46
)
Other non-cash uses of reserve
 
(18
)
 

Impact of changes in foreign currency rates
 
(28
)
 

Balance as of May 31, 2019
 
$
1,398

 
$


Total restructuring charges (inclusive of the Other segment) were $7.2 million for the nine months ended May 31, 2020, with $0.8 million of restructuring charges recognized being reported in the Condensed Consolidated Statements of Earnings in "Cost of products sold," with the balance of charges reported in "Restructuring charges."
The three and nine months ended May 31, 2020 included $0.8 million (reported in the Condensed Consolidated of Earnings in "Cost of products sold") and $1.6 million of restructuring expenses related to Cortland U.S. (Other segment), respectively. Restructuring reserves for Cortland U.S. were $0.6 million and $0.9 million as of May 31, 2020 and August 31, 2019, respectively. There were inconsequential restructuring charges recorded within the Other segment associated with the legacy restructuring initiatives in the three and nine months ended May 31, 2019.