Special Charges, Net

As part of our business strategy, we periodically right-size and consolidate operations to improve long-term results. Additionally, from time to time, we alter our business model to better serve customer demand, discontinue lower-margin product lines and rationalize and consolidate manufacturing capacity. Our restructuring and integration decisions are based, in part, on discounted cash flows and are designed to achieve our goals of reducing structural footprint and maximizing profitability. As a result of our strategic review process, we recorded net special charges of $5.3 in 2016, $5.1 in 2015 and $5.9 in 2014. These net special charges were primarily related to restructuring initiatives to consolidate manufacturing and sales facilities, reduce workforce, and rationalize certain product lines.

The components of the charges have been computed based on actual cash payouts, including severance and other employee benefits based on existing severance policies, local laws, and other estimated exit costs, and our estimate of the realizable value of the affected tangible and intangible assets.

Impairments of long-lived assets, including amortizable intangibles, which represent non-cash asset write-downs, typically arise from business restructuring decisions that lead to the disposition of assets no longer required in the restructured business. For these situations, we recognize a loss when the carrying amount of an asset exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Fair values for assets subject to impairment testing are determined primarily by management, taking into consideration various factors including third-party appraisals, quoted market prices and previous experience. If an asset remains in service at the decision date, the asset is written down to its fair value and the resulting net book value is depreciated over its remaining economic useful life. When we commit to a plan to sell an asset, including the initiation of a plan to locate a buyer, and it is probable that the asset will be sold within one year based on its current condition and sales price, depreciation of the asset is discontinued and the asset is classified as an asset held for sale. The asset is written down to its fair value less any selling costs.

Liabilities for exit costs, including, among other things, severance, other employee benefit costs, and operating lease obligations on idle facilities, are measured initially at their fair value and recorded when incurred.

We anticipate that the liabilities related to restructuring actions will be paid within one year from the period in which the action was initiated.

Special charges for the years ended December 31, 2016, 2015 and 2014 are described in more detail below and in the applicable sections that follow:



	Years Ended December 31,
	2016		2015		2014
Employee termination costs	$	1.7	$	4.5	$	5.3
Facility consolidation costs	—		0.2		0.3
Other cash costs, net	—		0.1		0.3
Non-cash asset write-downs	3.6		0.3		—
Total	$	5.3	$	5.1	$	5.9

2016 Charges:



	Employee Termination Costs		Facility Consolidation Costs		Other Cash Costs, Net		Non-Cash Asset Write-downs		Total Special Charges
HVAC segment	$	—	$	—	$	—	$	—	$	—
Detection and Measurement segment	0.5		—		—		0.3		0.8
Engineered Solutions segment	1.2		—		—		3.3		4.5
Corporate	—		—		—		—		—
Total	$	1.7	$	—	$	—	$	3.6	$	5.3

Detection and Measurement Segment — Charges for 2016 related to severance and other costs associated with our bus fare collection business. These actions resulted in the termination of 19 employees.

Engineered Solutions Segment — Charges for 2016 related primarily to costs incurred in connection with restructuring actions at our SPX Heat Transfer (“Heat Transfer”) business in order to reduce the cost base of the business in response to reduced demand. The cost incurred for the Heat Transfer business restructuring actions included asset impairment charges associated with the discontinuance of a product line and outsourcing initiatives of $3.3, as well as severance costs. These restructuring activities resulted in the termination of 97 employees.

2015 Charges:



	Employee Termination Costs		Facility Consolidation Costs		Other Cash Costs, Net			Non-Cash Asset Write-downs		Total Special Charges
HVAC segment	$	0.9	$	0.1	$	(0.2	)	$	0.3	$	1.1
Detection and Measurement segment	0.9		—		—			—		0.9
Engineered Solutions segment	1.6		0.1		0.3			—		2.0
Corporate	1.1		—		—			—		1.1
Total	$	4.5	$	0.2	$	0.1		$	0.3	$	5.1

HVAC Segment — Charges for 2015 related primarily to severance and other costs associated with facility consolidation efforts in Asia Pacific. These actions resulted in the termination of 44 employees.

Detection and Measurement Segment — Charges for 2015 related primarily to severance and other costs associated with restructuring initiatives at the segment’s specialty lighting and bus fare collection businesses. These actions resulted in the termination of 21 employees.

Engineered Solutions Segment — Charges for 2015 related primarily to severance and other costs associated with the continuation of restructuring actions at the segment’s dry cooling business in response to reduced demand. These actions resulted in the termination of 134 employees.

Corporate — Charges for 2015 related primarily to severance costs incurred in connection with the Spin-Off.

2014 Charges:



	Employee Termination Costs		Facility Consolidation Costs		Other Cash Costs, Net		Non-Cash Asset Write-downs		Total Special Charges
HVAC segment	$	0.7	$	0.2	$	—	$	—	$	0.9
Detection and Measurement segment	1.2		—		—		—		1.2
Engineered Solutions segment	2.7		0.1		0.3		—		3.1
Corporate	0.7		—		—		—		0.7
Total	$	5.3	$	0.3	$	0.3	$	—	$	5.9

HVAC Segment — Charges for 2014 related primarily to severance and other costs associated with the restructuring of a regional sales organization within the segment’s boiler products business. These actions resulted in the termination of 13 employees.

Detection and Measurement Segment — Charges for 2014 related primarily to severance and other costs associated with restructuring initiatives at various businesses within the segment. These actions resulted in the termination of 18 employees.

Engineered Solutions Segment — Charges for 2014 related primarily to severance and other costs associated with the closure of a facility in China. These actions resulted in the termination of 16 employees.

Corporate — Charges for 2014 related primarily to costs associated with our efforts to better align our corporate overhead structure with the new operational alignment that was implemented in the second half of 2013.

The following is an analysis of our restructuring liabilities for the years ended December 31, 2016, 2015 and 2014:



	December 31,
	2016			2015			2014
Balance at beginning of year	$	1.6		$	1.7		$	0.7
Special charges⁽¹⁾	1.7			4.8			5.9
Utilization — cash⁽²⁾	(2.1		)	(5.1		)	(5.1		)
Currency translation adjustment and other	(0.3		)	0.2			0.2
Balance at the end of year	$	0.9		$	1.6		$	1.7

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⁽¹⁾	The years ended December 31, 2016, 2015 and 2014 excluded $3.6, $0.3 and $0.0, respectively, of non-cash charges that impacted special charges but not the restructuring liabilities.


⁽²⁾	The years ended December 31, 2016, 2015 and 2014 included $0.0, $0.0 and $0.6 of cash utilized to settle retained liabilities of discontinued operations.