FACILITIES RELOCATION AND RESTRUCTURING

2012 Restructuring Initiative

The Corporation focuses on being the low-cost provider of its products by reducing operating costs and implementing lean manufacturing initiatives, which have in part led to the involuntary termination of certain positions and the consolidation of facilities and product lines.

During the third quarter of 2012, the Corporation recorded restructuring costs by segment as follows:



	(In thousands)
	Three Months Ended
	September 30, 2012
	Flow Control		Controls		Surface Technologies		Consolidated
Cost of sales	$	18	$	215	$	769	$	1,002
Selling expenses		512		153		32		697
General and administrative		—		—		—		—
Total	$	530	$	368	$	801	$	1,699

During the nine months ended of 2012, the Corporation recorded restructuring costs by segment as follows:



	(In thousands)
	Nine Months Ended
	September 30, 2012
	Flow Control		Controls		Surface Technologies		Consolidated
Cost of sales	$	1,303	$	2,351	$	1,163	$	4,817
Selling expenses		312		—		—		312
General and administrative		1,649		1,075		4,879		7,603
Total	$	3,264	$	3,426	$	6,042	$	12,732

The components of the restructuring costs by segment are as follows:

Flow Control

During the three and nine month periods ended September 30, 2012, the Flow Control segment recorded $0.5 million and $3.3 million, respectively, of restructuring charges, primarily for severance and benefits costs associated with headcount reductions to streamline operations.

Controls

During the three and nine month periods ended September 30, 2012, the Controls segment recorded $0.4 million and $3.4 million, respectively, of restructuring charges, primarily for severance and benefits costs associated with headcount reductions to streamline operations.

Surface Technologies

During the three and nine month periods ended September 30, 2012, the Surface Technologies segment recorded $0.8 million and $6.0 million, respectively, of restructuring charges. The $6.0 million of restructuring charges recorded during the nine month period ended September 30, 2012, includes non-cash charges of $4.8 million recorded during the second quarter of 2012, primarily related to fixed asset write-downs. The remainder of the restructuring charges were primarily associated with severance and benefits costs related to headcount reductions.

In June of 2013, the Corporation entered into a lease termination agreement for the facility that was vacated as part of the 2012 restructuring initiative. The lease termination payment was made in July, resulting in a $3.7 million decrease to the restructuring liability, which is reflected in Other current liabilities of the Corporation’s Condensed Consolidated Balance Sheet.

Nonrecurring measurements

In connection with our 2012 restructuring initiative, during the second quarter of 2012, the Corporation announced a plan to cease operations at a certain facility within our Surface Technologies segment by the fourth quarter of 2012. This decision resulted in a reduction of the useful life of the asset group at the facility. In accordance with the provisions of the Impairment or Disposal of Long-Lived Assets guidance of FASB Codification Subtopic 360-10, long-lived assets held and used with a carrying amount of $4.8 million were written down to their fair value of zero, resulting in an impairment charge of $4.8 million. The fair value of the impairment charge was determined using the income approach over the reduced useful life of the asset group. In accordance with the fair value hierarchy, the impairment charge is classified as a Level 3 measurement as it is based on significant other observable inputs.