Rationalizations

Throughout 2013, 2014 and 2015 the Company undertook rationalization plans in order to streamline its organization and lower its production costs. On October 31, 2013, we announced a global initiative to reduce our Industrial Materials segment's cost base and improve our competitive position. As part of this initiative, we ceased production at our two highest cost graphite electrode plants, located in Brazil and South Africa, as well as a machine shop in Russia. On July 29, 2014, we announced additional rationalization initiatives to increase profitability, reduce cost and improve global competitiveness in our former Engineered Solutions segment, which impacted our Corporate, R&D and other. During the third quarter of 2014, we announced the conclusion of another phase of our on-going company-wide cost savings assessment. This resulted in changes to the Company’s operating and management structure in order to streamline, simplify and decentralize the organization. These actions were designed to reduce costs by a combination of reduced contractor costs, attrition, early retirements and layoffs. Additionally, the Company downsized its corporate functions by approximately 25 percent, relocated to a smaller, more cost effective corporate headquarters and established a new Technology and Innovation Center.

These initiatives were substantially complete as of December 31, 2016. The rationalization liability as of December 31, 2016 was $0.1 million consisting of the plan described below and severance payouts related to prior rationalization plans. In June of 2016, we further impaired assets related to our South African facility within discontinued operations by $0.6 million to reflect a decline in market value. In December 2016, we further impaired assets related to our facility in Brazil within continuing operations by $2.8 million to reflect a decline in market value.

The following tables illustrate the impacts of these rationalization initiatives on our results of operations for 2014, 2015 and 2016.



For the Year Ended December 31, 2014 (Predecessor)
	Industrial Materials Segment		Corporate, R&D and Other		Total
	(Dollars in thousands)
Recorded in Cost of Sales
Accelerated depreciation	$	22,388	$	—	$	22,388
Inventory loss	941		—		941
Fixed asset write-offs and other	5,552		—		5,552
Recorded in Research and Development
Accelerated depreciation	—		2,312		2,312
Recorded in Selling and General Administrative
Accelerated depreciation	—		608		608
Other	89		515		604
Recorded in Rationalizations
Severance and related costs	5,040		2,425		7,465
Contract terminations	469		11		480
Total 2014 rationalization and related charges	$	34,479	$	5,871	$	40,350



For the Period January 1 Through August 14, 2015 (Predecessor)
	Industrial Materials Segment			Corporate, R&D and Other			Total
	(Dollars in thousands)
Recorded in Cost of Sales
Accelerated depreciation	$	432		$	940		1,372
Inventory loss	(33		)	—			(33		)
Fixed asset write-offs and other	1,715			—			1,715
Recorded in Selling and General Administrative
Other	400			954			1,354
Recorded in Rationalizations
Severance and related costs	157			(168		)	(11		)
Contract terminations	25			—			25
Total	$	2,696		$	1,726		$	4,422



For the Period August 15 Through December 31, 2015 (Successor)
	Industrial Materials Segment			Corporate, R&D and Other		Total

Recorded in Cost of Sales
Inventory loss	$	(649	)	$	—	$	(649	)
Fixed asset write-offs and other	329			—		329
Recorded in Selling and General Administrative
Other	135			290		425
Recorded in Rationalizations
Severance and related costs	154			71		225
Contract terminations	59			—		59
Total	$	28		$	361	$	389

For the Year Ended December 31, 2016 (Successor)
	Industrial Materials Segment			Corporate, R&D and Other		Total

Recorded in Cost of Sales
Fixed asset write-offs and other	$	636		$	—	$	636
Recorded in Selling and General Administrative
Other	1,258			412		1,670
Recorded in Rationalizations
Severance and related costs	(52		)	111		59
Total	$	1,842		$	523	$	2,365