Restructuring

3 Months Ended

Apr. 03, 2021

Restructuring and Related Activities [Abstract]

Restructuring costs include employee termination benefits, asset impairment charges and contract termination costs, as well as other incremental costs resulting from the restructuring actions. Employee termination benefits are recorded based on existing union and employee contracts, statutory requirements, completed negotiations and Company policy. Other incremental costs principally include equipment and personnel relocation costs. In addition to restructuring costs, the Company incurs incremental manufacturing inefficiency costs at the operating locations impacted by the restructuring actions during the related restructuring implementation period. Restructuring costs are recognized in the Company’s condensed consolidated financial statements in accordance with GAAP. Generally, charges are recorded when restructuring actions are approved and/or implemented.

In the first three months of 2021, the Company recorded charges of $21.7 million in connection with its restructuring actions. These charges consist of $18.2 million recorded as cost of sales and $3.5 million recorded as selling, general and administrative expenses. The restructuring charges consist of employee termination costs of $19.1 million, asset impairment charges of $0.2 million and contract termination credits of $1.0 million, as well as other related costs of $3.4 million. Employee termination benefits were recorded based on existing union and employee contracts, statutory requirements, completed negotiations and Company policy. Asset impairment charges relate to the disposal of buildings, leasehold improvements and/or machinery and equipment with carrying values of $0.2 million in excess of related estimated fair values.

The Company expects to incur approximately $39 million of additional restructuring costs related to activities initiated as of April 3, 2021, and expects that the components of such costs will be consistent with its historical experience. Any future restructuring actions will depend upon market conditions, customer actions and other factors.

A summary of 2021 activity is shown below (in millions):


	Accrual at January 1, 2021		2021		Utilization				Accrual at April 3, 2021
			Charges		Cash		Non-cash
Employee termination benefits	$	134.8	$	19.1	$	(16.0)	$	—	$	137.9
Asset impairment charges	—		0.2		—		(0.2)		—
Contract termination costs	4.2		(1.0)		(0.8)		—		2.4
Other related costs	—		3.4		(3.4)		—		—
Total	$	139.0	$	21.7	$	(20.2)	$	(0.2)	$	140.3