Quarterly report pursuant to Section 13 or 15(d)

Restructuring Charges (Notes)

v3.19.1
Restructuring Charges (Notes) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Feb. 28, 2018
Feb. 28, 2019
Feb. 28, 2018
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. Total restructuring charges for these activities were $0.1 million and $4.3 million in the three months ended February 28, 2019 and 2018, respectively. Year-to-date restructuring charges totaled $0.5 million and $10.9 million for fiscal 2019 and 2018, respectively. Approximately $0.8 million of the restructuring charges recognized in the three and six months ended February 28, 2018 were reported in the Consolidated Statements of Operations in "Cost of products sold," with the balance of the charges reported in "Restructuring charges." Liabilities for severance will generally be paid during the next twelve months, while future lease payments related to facilities vacated as a result of restructuring will be paid over the underlying remaining lease terms.
The following rollforwards summarize restructuring reserve activity by segment (in thousands):
 
 
Six Months Ended February 28, 2019
 
 
Industrial Tools & Services
 
Engineered Components & Systems
 
Corporate
 
Total
Balance as of August 31, 2018
 
$
1,687

 
$
1,592

 
$
415

 
$
3,694

Restructuring charges
 
21

 
442

 

 
463

Cash payments
 
(1,052
)
 
(314
)
 
(97
)
 
(1,463
)
Other non-cash uses/reclasses of reserve
 
(79
)
 
53

 
(370
)
 
(396
)
Impact of changes in foreign currency rates
 
(18
)
 
(28
)
 

 
(46
)
Balance as of February 28, 2019
 
$
559

 
$
1,745

 
$
(52
)
 
$
2,252

 
 
Six Months Ended February 28, 2018
 
 
Industrial Tools & Services
 
Engineered Components & Systems
 
Corporate
 
Total
Balance as of August 31, 2017
 
$
1,499

 
$
4,108

 
$
30

 
$
5,637

Restructuring charges
 
2,929

 
3,710

 
4,274

 
10,913

Cash payments
 
(1,750
)
 
(3,301
)
 
(1,648
)
 
(6,699
)
Other non-cash uses of reserve
 
(354
)
 
(801
)
 
(2,007
)
(1) 
(3,162
)
Impact of changes in foreign currency rates
 
(6
)
 
(66
)
 

 
(72
)
Balance as of February 28, 2018
 
$
2,318

 
$
3,650

 
$
649

 
$
6,617

(1) Majority of non-cash uses of reserve represents accelerated equity vesting in connection with employee severance agreements.
On March 21, 2019, the Company announced a new restructuring plan focused on the integration of the Enerpac and Hydratight businesses (IT&S segment) as well as driving efficiencies within the overall corporate structure. We expect to achieve $12-$15 million of annual savings with estimated restructuring costs of $15-$20 million and anticipate completing these actions within 18-24 months. The annual benefit of these gross cost savings may be impacted by a number of factors, including sales and production volume variances and annual bonus expense differentials.
 
Restructuring Charges, including recorded in Cost of Product Sold $ 4,300   $ 10,913
Restructuring costs recorded in cost of products sold $ 800   $ 800