Restructuring Costs

U.S. Distribution and Corporate Functions

During the quarter ended October 3, 2015, the Company announced a restructuring plan focused on realigning certain costs within its U.S. distribution business and select corporate functions. The restructuring plan includes the closure of four underperforming company-operated supply centers in the U.S. and the elimination of its roofing product offering in eleven U.S. supply centers. During the third quarter, the Company recorded restructuring costs of $4.5 million, which reflects a cash charge of $2.2 million and a non-cash charge of $2.3 million. The cash charge relates to early lease termination costs and severance for workforce reductions of $1.4 million and $0.5 million, respectively. Of the total non-cash charge of $2.3 million, $2.2 million is reflected within cost of sales for the quarter ended October 3, 2015, and is related to the write-down of roofing inventory in certain markets. The Company expects the supply center closures to be completed by the end of the fourth quarter. Approximately $0.7 million of cash payments will be made in 2015 in connection with the restructuring plan, primarily related to employee severance and equipment lease termination fees. In the Condensed Consolidated Statements of Comprehensive Loss, the portion of the restructuring charge related to the $2.2 million write-down of roofing inventory is included in “Cost of sales,” while the remaining portion is included in “Restructuring costs.”

Manufacturing

The Company discontinued its use of the warehouse facility adjacent to the Ennis manufacturing plant during the second quarter of 2009 and recorded a restructuring liability related to the discontinued use of the warehouse facility. During the quarter ended October 3, 2015, the Company re-measured this restructuring liability due to a change in the expected amount of sublease income to be collected over the remaining lease term. A similar re-measurement occurred during the first quarter of 2014 due to a change in the amount and timing of cash flows related to taxes and insurance over the lease term. Consequently, the Company decreased the restructuring liability and recognized a benefit of $0.4 million and $0.3 million, for the quarter and nine month period ended October 3, 2015 and the nine month period ended September 27, 2014, respectively, within “Restructuring costs” in the Condensed Consolidated Statements of Comprehensive Loss.

Changes in the restructuring liability for the quarters and nine months ended October 3, 2015 and September 27, 2014, respectively, are as follows (in thousands):



	Quarters Ended
	October 3, 2015								September 27, 2014
	Distribution		Manufacturing			Total			Distribution		Manufacturing			Total
Balance at the beginning of the period	$	—	$	1,627		$	1,627		$	—	$	2,109		$	2,109
Increase (decrease)	2,177		(442		)	1,735			—		—			—
Accretion of related lease obligations	—		170			170			—		120			120
Payments	—		(149		)	(149		)	—		(185		)	(185		)
Balance at the end of the period	$	2,177	$	1,206		$	3,383		$	—	$	2,044		$	2,044



	Nine Months Ended
	October 3, 2015								September 27, 2014
	Distribution		Manufacturing			Total			Distribution		Manufacturing			Total
Balance at the beginning of the period	$	—	$	1,960		$	1,960		$	—	$	2,772		$	2,772
Increase (decrease)	2,177		(442		)	1,735			—		(331		)	(331		)
Accretion of related lease obligations	—		322			322			—		372			372
Payments	—		(634		)	(634		)	—		(769		)	(769		)
Balance at the end of the period	$	2,177	$	1,206		$	3,383		$	—	$	2,044		$	2,044

The restructuring liability is included in “Accrued liabilities” and “Other liabilities” in the Condensed Consolidated Balance Sheets and will continue to be paid until April 2020 and July 2020, the lease expiration dates for the Ennis warehouse facility and the last of the supply center closures, respectively.