Restructuring Charges and Other Exit-Related Costs

9 Months Ended

May 31, 2016

Restructuring Charges, Asset Impairment and Accelerated Depreciation [Abstract]

Restructuring Charges and Other Exit-Related Costs

Restructuring Charges and Other Exit-Related Costs

The Company has implemented a number of restructuring initiatives designed to reduce operating expenses and improve profitability and to achieve further integration and synergistic cost efficiencies in its operating platform. The restructuring charges incurred by the Company during the periods presented pertain to three separate plans: the plans announced in the first quarter of fiscal 2014 (the “Q1’14 Plan”), the Q1’15 Plan and the Q2'15 Plan.

The Q1'14 Plan was designed to reduce the Company's annual operating expenses through headcount reductions, productivity improvements, procurement savings and other operational efficiencies. The Q1'15 Plan included additional productivity initiatives to improve profitability through a combination of revenue drivers and cost reduction initiatives.

At the end of the second quarter of fiscal 2015, the Company commenced additional restructuring and exit-related initiatives by undertaking strategic actions consisting of idling underutilized assets at AMR and initiating the closure of seven auto parts stores to align the Company's business to the prevalent market conditions. The Company expanded these initiatives in April 2015, and also announced the integration of the MRB and APB Businesses into the combined AMR platform, in order to achieve operational synergies and reduce the Company's annual operating expenses, primarily selling, general and administrative expenses, through headcount reductions, reducing organizational layers, consolidating shared service functions and other non-headcount measures. Additional cost savings and productivity improvement initiatives, including additional reductions in personnel, savings from procurement activities, streamlining of administrative and supporting services functions, and adjustments to our operating capacity through facility closures, were identified and initiated in fiscal 2016. Collectively, these initiatives are referred to as the Q2'15 Plan.

The Company incurred restructuring charges of less than $1 million and $6 million during the three and nine months ended May 31, 2016, respectively, and $7 million and $10 million during the three and nine months ended May 31, 2015, respectively. The remaining charges relating to these initiatives are expected to be substantially incurred by the end of fiscal 2017. The significant majority of the restructuring charges require the Company to make cash payments.

In addition to the restructuring charges recorded related to these initiatives, during the three and nine months ended May 31, 2016 and May 31, 2015, the Company incurred other exit-related costs consisting of long-lived asset impairments and accelerated depreciation due to shortened useful lives of long-lived assets, including from abandonment, in connection with site closures and idled equipment.

Restructuring charges and other exit-related costs were comprised of the following (in thousands):

	Three Months Ended May 31, 2016						Three Months Ended May 31, 2015
	All Other Plans		Q2’15 Plan		Total Charges		All Other Plans			Q2’15 Plan		Total Charges
Restructuring charges:
Severance costs	$	—	$	340	$	340	$	(5	)	$	4,040	$	4,035
Contract termination costs	76		26		102		26			1,610		1,636
Other restructuring costs	—		—		—		—			1,609		1,609
Total restructuring charges	76		366		442		21			7,259		7,280
Other exit-related costs:
Asset impairments and accelerated depreciation	—		119		119		—			150		150
Total other exit-related costs	—		119		119		—			150		150
Total restructuring charges and other exit-related costs	$	76	$	485	$	561	$	21		$	7,409	$	7,430
Restructuring charges and other exit-related costs included in continuing operations					$	542						$	5,978
Restructuring charges and other exit-related costs included in discontinued operations					$	19						$	1,452

	Nine Months Ended May 31, 2016						Nine Months Ended May 31, 2015
	All Other Plans		Q2’15 Plan		Total Charges		All Other Plans		Q2’15 Plan		Total Charges
Restructuring charges:
Severance costs	$	—	$	4,686	$	4,686	$	393	$	4,580	$	4,973
Contract termination costs	201		683		884		335		1,689		2,024
Other restructuring costs	—		—		—		1,223		1,702		2,925
Total restructuring charges	201		5,369		5,570		1,951		7,971		9,922
Other exit-related costs:
Asset impairments and accelerated depreciation	—		3,127		3,127		—		6,502		6,502
Total other exit-related costs	—		3,127		3,127		—		6,502		6,502
Total restructuring charges and other exit-related costs	$	201	$	8,496	$	8,697	$	1,951	$	14,473	$	16,424
Restructuring charges and other exit-related costs included in continuing operations					$	7,758					$	11,964
Restructuring charges and other exit-related costs included in discontinued operations					$	939					$	4,460

	All Other Plans		Q2'15 Plan		Total
Total restructuring charges to date	$	7,962	$	13,992	$	21,954
Total expected restructuring charges	$	7,991	$	14,408	$	22,399

The following illustrates the reconciliation of the restructuring liability by major type of costs for the nine months ended May 31, 2016 (in thousands):

	All Other Plans									Q2’15 Plan									All Plans
	Balance 8/31/2015		Charges		Payments and Other			Balance 5/31/2016		Balance 8/31/2015		Charges		Payments and Other			Balance 5/31/2016		Total Charges to Date		Total Expected Charges
Severance costs	$	—	$	—	$	—		$	—	$	1,226	$	4,686	$	(4,819	)	$	1,093	$	14,922	$	14,977
Contract termination costs	362		201		(515		)	48		1,320		683		(786		)	1,217		3,350		3,668
Other restructuring costs	—		—		—			—		—		—		—			—		3,682		3,754
Total	$	362	$	201	$	(515	)	$	48	$	2,546	$	5,369	$	(5,605	)	$	2,310	$	21,954	$	22,399

Due to the individual immateriality of the activity and liability balances for each of the Q1'14 Plan and Q1'15 Plan, the disclosure of restructuring activity and the reconciliation of the restructuring liability for these two plans is provided in the aggregate ("All Other Plans").

Restructuring charges and other exit-related costs by reportable segment and discontinued operations were as follows (in thousands):

	Three Months Ended May 31,				Nine Months Ended May 31,					Total Charges to Date		Total Expected Charges
	2016		2015		2016			2015
Restructuring charges:
Auto and Metals Recycling	$	423	$	4,017	$	4,766		$	6,260	$	15,564	$	15,937
Unallocated (Corporate)	—		1,811		812			1,868		4,819		4,819
Discontinued operations	19		1,452		(8		)	1,794		1,571		1,643
Total restructuring charges	442		7,280		5,570			9,922		21,954		22,399
Other exit-related costs:
Auto and Metals Recycling	119		150		2,180			3,836		6,582
Discontinued operations	—		—		947			2,666		3,613
Total other exit-related costs	119		150		3,127			6,502		10,195
Total restructuring charges and other exit-related costs	$	561	$	7,430	$	8,697		$	16,424	$	32,149

The Company does not allocate restructuring charges and other exit-related costs to the segments’ operating results because management does not include this information in its measurement of the performance of the operating segments.