Annual report pursuant to Section 13 and 15(d)

Restructuring Charges Restructuring Charges(Notes)

v3.20.2
Restructuring Charges Restructuring Charges(Notes)
 12 Months Ended
Aug. 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 (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 $6.6 million for the year ended August 31, 2020. The Company recorded total restructuring charges of $4.2 million for the year ended August 31, 2019.
The following rollforwards summarize restructuring reserve activity for the IT&S reportable segment and corporate (in thousands):
Year Ended August 31, 2019
Industrial Tools & Services Corporate Total
Balance as of August 31, 2018 $ 1,687  $ 46  $ 1,733 
Restructuring charges 4,161  —  4,161 
Cash payments (2,954) (46) (3,000)
Other non-cash uses/reclasses of reserve 54  —  54 
Impact of changes in foreign currency rates (36) —  (36)
Balance as of August 31, 2019 $ 2,912  $ —  $ 2,912 
Year Ended August 31, 2020
Industrial Tools & Services Corporate Total
Balance as of August 31, 2019 $ 2,912  $ —  $ 2,912 
Restructuring charges 4,520  2,073  6,593 
Cash payments (5,458) (1,286) (6,744)
Other non-cash uses of reserve (1)
(554) (521) (1,075)
Impact of changes in foreign currency rates 23  1  24 
Balance as of August 31, 2020 $ 1,443  $ 267  $ 1,710 
(1) Majority of non-cash uses of reserve represents accelerated equity vesting with employee severance agreements.
In the year ended August 31, 2020, the Company recorded $1.6 million of restructuring expenses related to Cortland U.S. (Other segment) of which $0.8 million was reported in the Consolidated Statements of Operations in "Cost of products sold". Restructuring reserves for Cortland U.S. were $0.4 million and $0.9 million for the year ended August 31, 2020 and 2019, respectively. There were inconsequential restructuring charges recorded within the Other segment associated with the legacy restructuring initiatives in the year ended August 31, 2019.
Total restructuring charges (inclusive of the Other segment) were $8.1 million for the year ended August 31, 2020, with approximately $0.8 million of the restructuring charges being reported in the Consolidated Statements of Operations in "Cost of products sold," with the balance of the charges reported in "Restructuring charges."
Restructuring and Related Costs
The following rollforwards summarize restructuring reserve activity for the IT&S reportable segment and corporate (in thousands):
Year Ended August 31, 2019
Industrial Tools & Services Corporate Total
Balance as of August 31, 2018 $ 1,687  $ 46  $ 1,733 
Restructuring charges 4,161  —  4,161 
Cash payments (2,954) (46) (3,000)
Other non-cash uses/reclasses of reserve 54  —  54 
Impact of changes in foreign currency rates (36) —  (36)
Balance as of August 31, 2019 $ 2,912  $ —  $ 2,912 
Year Ended August 31, 2020
Industrial Tools & Services Corporate Total
Balance as of August 31, 2019 $ 2,912  $ —  $ 2,912 
Restructuring charges 4,520  2,073  6,593 
Cash payments (5,458) (1,286) (6,744)
Other non-cash uses of reserve (1)
(554) (521) (1,075)
Impact of changes in foreign currency rates 23  1  24 
Balance as of August 31, 2020 $ 1,443  $ 267  $ 1,710 
(1) Majority of non-cash uses of reserve represents accelerated equity vesting with employee severance agreements.