Restructuring

November 2015 restructuring program

In the fourth quarter of 2015, the Company committed to a strategic roadmap focused on growth and optimization of the portfolio, developing leading cost and efficiency positions, growth through innovation and cultivation of a high-performance culture. In 2017, the Company approved additional expenditures to further expand, strengthen and accelerate the Company's program targeting operational effectiveness and efficiencies.

As part of the strategic roadmap, the Company recognized a $6.9 million pre-tax loss in the three and nine months ended September 29, 2017 and a $53.2 million pre-tax gain in the nine months ended September 30, 2016 from asset sales related to the restructuring program. The gains/losses are recognized in the SG&A expenses caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) in the North America segment. The disposals 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.

Total expected costs and costs incurred to date by reportable segment are below (in millions):



	North America		Europe		Latin America		Total
Total expected restructuring costs	$	80.0	$	24.0	$	6.0	$	110.0
Total aggregate costs to date	78.0		22.2		5.5		105.7
Estimated remaining costs	$	2.0	$	1.8	$	0.5	$	4.3



	North America		Europe			Latin America		Total
Cost of sales incurred in the three months ended September 29, 2017	$	1.4	$	(0.4	)	$	—	$	1.0
SG&A expenses incurred in the three months ended September 29, 2017	4.8		—			—		4.8
Cost of sales incurred in the nine months ended September 29, 2017	6.4		0.1			0.3		6.8
SG&A expenses incurred in the nine months ended September 29, 2017	22.8		1.7			—		24.5



	North America		Europe		Latin America		Total
Cost of sales incurred in the three months ended September 30, 2016	$	2.0	$	0.1	$	0.3	$	2.4
SG&A expenses incurred in the three months ended September 30, 2016	21.0		—		—		21.0
Cost of sales incurred in the nine months ended September 30, 2016	5.7		2.5		0.5		8.7
SG&A expenses incurred in the nine months ended September 30, 2016	29.6		1.2		0.3		31.1

Changes in the restructuring reserve and activity for the nine months ended September 29, 2017 are below (in millions):



	Employee Separation Costs			Asset-Related Costs			Other Costs			Total
Total expected restructuring charges	$	17.0		$	25.0		$	68.0		$	110.0
Balance, December 31, 2016	$	5.9		$	—		$	13.3		$	19.2
Net provisions	3.3			2.3			25.7			31.3
Net benefits (provisions) charged against net assets	—			(2.3		)	(0.2		)	(2.5		)
Payments	(6.9		)	—			(38.2		)	(45.1		)
Foreign currency translation	0.2			—			0.5			0.7
Balance, September 29, 2017	$	2.5		$	—		$	1.1		$	3.6
Total aggregate costs to date	$	16.0		$	23.6		$	66.1		$	105.7

Employee Separation Costs

The Company recorded employee separation costs of $0.2 million and $3.3 million for the three and nine months ended September 29, 2017, respectively. The employee separation charges were $0.2 million and $1.1 million in North America for the three and nine months ended September 29, 2017, respectively, and $2.2 million in Europe for the nine months ended September 29, 2017. 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 29, 2017, employee separation costs included severance charges for approximately 480 employees; approximately 360 of these employees were classified as manufacturing employees and approximately 120 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 long-lived asset impairment charges of $2.3 million in North America for the nine months ended September 29, 2017. 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.

Other Costs

The Company recorded other restructuring-type charges of $5.6 million and $25.7 million for the three and nine months ended September 29, 2017, respectively. The other restructuring-type charges were $6.0 million and $25.8 million in North America for the three and nine months ended September 29, 2017, respectively, and $0.3 million in Latin America for the nine months ended September 29, 2017. These charges were partially offset by a benefit of $0.4 million in Europe for the three and nine months ended September 29, 2017. 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. These restructuring-type charges primarily include project management costs, such as consulting fees related to the supply chain redesign and the cost to change internal systems and processes to support the underlying organizational changes, as well as working capital write-downs not associated with normal operations, equipment relocation, termination of contracts and other immaterial costs.