Restructuring

During the three months ended December 31, 2016, we recognized no restructuring expense as the restructuring plan is complete. We recognized a pre-tax restructuring gain of $1.8 million in the six months ended December 31, 2016, and recognized $2.0 million and $3.2 million of restructuring expense in the three and six months ended December 31, 2015, respectively. We utilize available market prices and management estimates to determine the fair value of impaired fixed assets. Restructuring activity is included in the Restructuring (Gain) Expense line item on the Company’s Condensed Consolidated Statements of Income.

Capacity Utilization Restructuring Plan:

In November 2014, we announced a capacity utilization restructuring plan which included the consolidation of our metal fabrication production from an operation located in Post Falls, Idaho, into existing production facilities in Indiana, and the reduction of our Company plane fleet from two jets to one.

The transfer of work from our Idaho facility involved the start-up of metal fabrication capabilities in an existing Company-owned facility, along with the transfer of certain assembly operations into two additional existing Company-owned facilities, all located in southern Indiana. All production was transferred out of the Idaho facility as of March 2016, after which work continued in the Indiana facilities to train employees, ramp up production and eliminate the inefficiencies associated with the start-up of production in these facilities. The improvement of customer delivery, supply chain dynamics, and reduction of transportation costs are expected to generate pre-tax annual savings of approximately $5 million. For our second quarter and year-to-date periods ended December 31, 2016 we achieved savings of approximately $1.3 million and approximately $2.2 million, respectively. In addition, during the first quarter of fiscal year 2017, we sold our Post Falls, Idaho facility and land which was classified as held for sale. Therefore, the year-to-date period ended December 31, 2016 includes a pre-tax gain of $2.1 million as the $12.0 million selling price net of selling costs exceeded the book value of the facility and land.

The reduction of our plane fleet from two jets to one reduced our cost structure while aligning the plane fleet size with our needs following the spin-off of Kimball Electronics on October 31, 2014. The sale of the plane resulted in a $0.2 million pre-tax gain in the third quarter of fiscal year 2015 which partially offset the impairment charge of $1.1 million recorded in the second quarter of fiscal year 2015. As a result of the aircraft fleet reduction, our annual pre-tax savings are $0.8 million.

The restructuring plan is complete with pre-tax restructuring totaling $10.8 million. Excluding the pre-tax gain from the sale of the Idaho facility of $2.1 million, the restructuring expense consisted of $4.9 million of transition, training, and other employee costs, $6.9 million of plant closure and other exit costs, and $1.1 million of non-cash asset impairment. Approximately 91% of the total restructuring expense was cash expense.



Summary of Restructuring Plan:
	Accrued June 30, 2016		Six Months Ended December 31, 2016										Total Incurred Since Plan Announcement			Total Expected Plan Costs
(Amounts in Thousands)	Accrued June 30, 2016		Amounts Charged / (Gain) Cash			Amounts Charged Non-cash		Amounts Utilized/ Cash Paid			Accrued December 31, 2016 ⁽¹⁾		Total Incurred Since Plan Announcement			Total Expected Plan Costs
Capacity Realignment and Post Falls, Idaho Exit
Transition and Other Employee Costs	$	444	$	(24	)	$	—	$	(340	)	$	80	$	4,681		$	4,681
Asset Write-downs	—		—			—		—			—		284			284
Plant Closure and Other Exit Costs	7		273			—		(280		)	—		6,857			6,857
Gain on Sale of Facility	—		(2,081		)	—		2,081			—		(2,081		)	(2,081		)
Total	$	451	$	(1,832	)	$	—	$	1,461		$	80	$	9,741		$	9,741
Plane Fleet Reduction
Transition and Other Employee Costs	$	—	$	—		$	—	$	—		$	—	$	224		$	224
Asset Write-downs	—		—			—		—			—		822			822
Total	$	—	$	—		$	—	$	—		$	—	$	1,046		$	1,046
Total Restructuring Plan	$	451	$	(1,832	)	$	—	$	1,461		$	80	$	10,787		$	10,787


(1)	The accrued restructuring balance at December 31, 2016 is recorded in current liabilities.