Restructuring

November 2015 restructuring program

In the fourth quarter of 2015, the Company committed to a new strategic roadmap targeting growth and improvement in market positions, improvement to its overall cost position, growth through innovation, enhancement of organizational capabilities, alignment of its organization structure and cultivation of a high-performance culture. This effort has been launched in a phased approach and is expected to continue over the next several years.

The Company expects to incur approximately $60 million in before-tax restructuring charges; $46 million in the North America segment ("North America"), $11 million in the Europe segment ("Europe") and $3 million in the Latin America segment ("Latin America"). For the three and nine months ended September 30, 2016, the Company incurred charges of $23.4 million and $39.8 million, respectively. For the three and nine months ended September 30, 2016, costs incurred were $23.0 million and $35.3 million in North America, $0.1 million and $3.7 million in Europe and $0.3 million and $0.8 million in Latin America, respectively. For the three and nine months ended September 30, 2016, $2.4 million and $8.7 million of these charges were recorded in the Cost of sales caption and $21.0 million and $31.1 million were recorded in the SG&A expenses caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), respectively. As of September 30, 2016, aggregate costs incurred were $35.4 million in North America, $10.4 million in Europe and $2.6 million in Latin America.

As part of the strategic roadmap, in the second quarter of 2016, the Company completed the disposal of its North American Automotive Ignition Wire business for total consideration of $70.7 million. The pre-tax gain recognized in the nine months ended September 30, 2016 was $53.2 million. The gain is recognized in the SG&A expenses caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). This disposal did not represent a strategic shift that has or will have a major effect on the Company’s operations and financial results; therefore, the results are presented as continued operations.

Changes in the restructuring reserve and activity for the nine months ended September 30, 2016 are below (in millions):



	Employee Separation Costs			Asset-Related Costs			Other Costs			Total
Total expected restructuring charges	$	8.0		$	17.0		$	35.0		$	60.0
Balance, December 31, 2015	$	1.3		$	—		$	3.2		$	4.5
Net provisions	5.7			14.3			19.8			39.8
Net benefits charged against the assets	—			(14.3		)	(0.3		)	(14.6		)
Payments	(2.9		)	—			(18.8		)	(21.7		)
Foreign currency translation	—			—			0.1			0.1
Balance, September 30, 2016	$	4.1		$	—		$	4.0		$	8.1
Total aggregate costs to date	$	7.9		$	16.2		$	24.3		$	48.4

Employee Separation Costs

The Company recorded employee separation costs of $3.3 million and $5.7 million for the three and nine months ended September 30, 2016, respectively. The employee separation charges were $3.1 million and $4.1 million in North America, $0.1 million and $1.5 million in Europe and $0.1 million in Latin America for the three and nine months ended September 30, 2016, respectively.

Employee separation costs include severance and retention bonuses. As of September 30, 2016, employee separation costs included severance charges for approximately 310 employees; approximately 220 of these employees were classified as manufacturing employees and approximately 90 of these employees were classified as non-manufacturing employees. The charges relate to involuntary separations based on current salary levels and past service periods and are either considered one-time employee termination benefits in accordance with ASC 420 - Exit or Disposal Cost Obligations ("ASC 420") or charges for contractual termination benefits under ASC 712 - Compensation - Nonretirement Postemployment Benefits ("ASC 712").

Asset-Related Costs

The Company recorded asset-related costs of $12.9 million and $14.3 million for the three and nine months ended September 30, 2016, respectively. The asset-related charges were $12.9 million and $13.9 million in North America for the three and nine months ended September 30, 2016, respectively, and $0.4 million in Latin America for the nine months ended September 30, 2016.

Asset-related costs consist of asset write-downs and accelerated depreciation. Asset write-downs relate to the establishment of a new fair value basis for assets to be classified as held-for-sale or to be disposed of, as well as asset impairment charges for asset groups to be held-and-used in locations which are being restructured and it has been determined the undiscounted cash flows expected to result from the use and eventual disposition of the assets are less than their carrying value.

The Company notes the plan to abandon a long-lived asset before the end of its previously estimated useful life is a change in accounting estimate per ASC 250 - Accounting Changes and Error Corrections. The annual depreciation impact from the asset write-downs and changes in estimated useful lives is not material.

In 2016, as part of the new strategic plan, the Company's management evaluated alternatives for its automotive business which included the sale of its automotive ignition wire business in the second quarter as noted above. In the third quarter of 2016, the Company continued to pursue alternatives for the remaining automotive business. As a result of this change in strategy, the Company performed an impairment test in the third quarter of 2016. Using a market approach, the Company recorded a goodwill impairment charge of $7.4 million and an impairment charge on the amortized intangible assets of $4.7 million. These costs are included as asset-related costs. As of September 30, 2016, the remaining goodwill and intangible assets related to the acquisition of the automotive business is zero.

Other Costs

The Company recorded other restructuring-type charges of $7.2 million and $19.8 million for the three and nine months ended September 30, 2016, respectively. The other restructuring-type charges were $7.0 million and $17.3 million in North America for the three and nine months ended September 30, 2016, respectively, $2.2 million in Europe for the nine months ended September 30, 2016 and $0.2 million and $0.3 million in Latin America for the three and nine months ended September 30, 2016, respectively.

Other restructuring-type charges are incurred as a direct result of the restructuring program. Such charges primarily include working capital write-downs not associated with normal operations, project management, termination of contracts and other immaterial costs.

July 2014 restructuring program

In July 2014, the Company announced a comprehensive restructuring program. As of September 30, 2016, this program is substantially complete and future estimated costs are expected to be immaterial. The restructuring program was focused on the closure of certain underperforming assets as well as the consolidation and realignment of other facilities. The Company also implemented initiatives to reduce SG&A expenses globally.

As part of the restructuring program, in the second quarter of 2015, the Company completed the disposal of a subsidiary in Spain for cash consideration of $1.8 million. The pre-tax loss on the sale from the disposition in the second quarter of 2015 was $11.6 million. This sale did not represent a strategic shift that had or will have a major effect on the Company's operations and financial results; therefore, the results are not presented as discontinued operations. This loss is included as asset-related restructuring costs in the Europe segment in the nine months ended October 2, 2015 and is recognized in the SG&A expenses caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

For the three and nine months ended September 30, 2016, the Company incurred charges of $0.8 million and $10.6 million, respectively. For the three and nine months ended October 2, 2015, the Company incurred charges of $3.6 million and $38.3 million, respectively. For the three and nine months ended September 30, 2016, costs incurred were $0.1 million and $6.2 million in North America, $0.2 million and $2.0 million in Europe and $0.5 million and $2.4 million in Latin America, respectively. For the three and nine months ended October 2, 2015, costs incurred were $2.3 million and $9.9 million in North America, respectively, $21.5 million in Europe for the nine months ended October 2, 2015, $0.9 million and $6.9 million in Latin America for the three and nine months ended October 2, 2015, respectively, and $0.4 million in Africa/Asia Pacific for the three months ended October 2, 2015.

For the three and nine months ended September 30, 2016, $0.5 million and $7.5 million of these charges were recorded in the Cost of sales caption and $0.3 million and $3.1 million were recorded in the SG&A expenses caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), respectively. For the three and nine months ended October 2, 2015, $2.7 million and $13.7 million of these charges were recorded in the Cost of sales caption and $0.9 million and $24.6 million were recorded in the SG&A expenses caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), respectively. The Company also incurred other costs as outlined below. As of September 30, 2016, aggregate costs incurred were $24.9 million in North America, $139.7 million in Europe, $39.0 million in Latin America and $15.0 million in Africa/Asia Pacific.

Changes in the restructuring reserve and activity for the nine months ended September 30, 2016 are below (in millions):



	Employee Separation Costs			Asset-Related Costs			Other Costs			Total
Balance, December 31, 2015	$	7.7		$	—		$	3.0		$	10.7
Net provisions	1.3			1.8			7.5			10.6
Net benefits charged against the assets	—			(1.8		)	0.6			(1.2		)
Payments	(8.9		)	—			(5.5		)	(14.4		)
Foreign currency translation	0.2			—			—			0.2
Balance, September 30, 2016	$	0.3		$	—		$	5.6		$	5.9
Total aggregate costs to date	$	52.2		$	135.1		$	31.3		$	218.6

Employee Separation Costs

The Company recorded a benefit to employee separation costs of $0.1 million for the three months ended September 30, 2016 and expenses of $1.3 million for the nine months ended September 30, 2016. For the three and nine months ended September 30, 2016, the Company recorded a benefit of $0.1 million and expenses of $1.2 million in North America, respectively, and expenses of $0.1 million in Latin America for the nine months ended September 30, 2016. The Company recorded employee separation costs of $0.1 million and $12.3 million for the three and nine months ended October 2, 2015. The employee separation charges were $1.5 million and $7.9 million in North America, a benefit of $1.9 million for the three months ended October 2, 2015 and charges of $2.9 million for the nine months ended October 2, 2015 in Europe, charges of $0.1 million and $1.0 million in Latin America and charges of $0.4 million and $0.5 million in Africa/Asia Pacific for the three and nine months ended October 2, 2015, respectively.

Employee separation costs include severance, retention bonuses and pension costs. As of September 30, 2016, employee separation costs included severance charges for approximately 1,430 employees; approximately 1,110 of these employees were classified as manufacturing employees and approximately 320 of these employees were classified as non-manufacturing employees. The charges relate to involuntary separations based on current salary levels and past service periods and are either considered one-time employee termination benefits in accordance with ASC 420 or charges for contractual termination benefits under ASC 712.

Asset-Related Costs

The Company recorded asset-related costs of $0.1 million and $1.8 million for the three and nine months ended September 30, 2016, respectively. For the three and nine months ended September 30, 2016, the Company recorded a benefit of $0.2 million and charges of $0.8 million in North America and charges of $0.3 million and $1.0 million in Latin America, respectively. The Company recorded asset-related costs of $0.8 million and $14.8 million for the three and nine months ended October 2, 2015, respectively. The long-lived asset impairment charges were $10.8 million in Europe for the nine months ended October 2, 2015 and $0.8 million and $4.0 million in Latin America for the three and nine months ended October 2, 2015, respectively.

Other Costs

The Company recorded other restructuring-type charges of $0.8 million and $7.5 million for the three and nine months ended September 30, 2016, respectively. The other restructuring-type charges were $0.4 million and $4.2 million in North America, $0.2 million and $2.0 million in Europe and $0.2 million and $1.3 million in Latin America for the three and nine months ended September 30, 2016, respectively. The Company recorded other restructuring-type charges of $2.7 million and $11.2 million for the three and nine months ended October 2, 2015, respectively. The other restructuring-type charges were $0.8 million and $2.0 million in North America and $1.9 million and $7.8 million in Europe for the three and nine months ended October 2, 2015, respectively, $1.9 million in Latin America for the nine months ended October 2, 2015 and a benefit of $0.5 million in Africa/Asia Pacific for the nine months ended October 2, 2015.

Other restructuring-type charges are incurred as a direct result of the restructuring program. Such charges primarily include working capital write-downs not associated with normal operations, equipment relocation, termination of contracts and other immaterial costs.