Note 6:

Restructuring Activities

During fiscal 2013, the Company announced its intention to restructure its Europe segment. The Company’s restructuring actions and plans have included exiting certain non-core product lines based upon Modine’s global product strategy, reducing manufacturing costs, consolidating production facilities, implementing headcount reductions, and disposing of and selling certain underperforming or non-strategic assets. The restructuring activities are designed to align the cost structure of the segment with the segment’s strategic focus on the commercial vehicle, off-highway, automotive component, and engine products markets, while improving gross margin and return on average capital employed.

Since commencement of the Europe segment restructuring program, the Company has recorded $28.6 million of employee severance costs, primarily related to headcount reductions at two manufacturing facilities and the segment headquarters, $26.1 million of asset impairment charges, and $9.3 million of accelerated depreciation and other restructuring and repositioning expenses.

Restructuring and repositioning expenses related to the Europe segment restructuring program were as follows:

	Three months ended December 31,				Nine months ended December 31,
	2014		2013		2014		2013
Employee severance and related benefits	$	-	$	9.0	$	-	$	9.8
Accelerated depreciation		-		-		-		4.3
Other restructuring and repositioning expenses		0.6		0.4		1.7		0.7
Total	$	0.6	$	9.4	$	1.7	$	14.8

During the three and nine months ended December 31, 2014, the Company recorded $0.6 million and $1.7 million, respectively, of Europe segment restructuring and repositioning expenses as restructuring expenses in the consolidated statement of operations. During the nine months ended December 31, 2013, the Company recorded $4.3 million of Europe segment restructuring and repositioning costs within cost of sales. During the three and nine months ended December 31, 2013, the Company recorded Europe segment restructuring and repositioning costs of $9.4 million and $10.5 million, respectively, as restructuring expenses in the consolidated statement of operations.

The Company accrues severance in accordance with its written plans, procedures, and relevant statutory requirements. Changes in accrued severance related to the Europe segment restructuring program were as follows:

	Three months ended December 31,
	2014			2013
Beginning balance	$	15.0		$	10.7
Additions		-			9.0
Payments		(0.6	)		(1.5	)
Effect of exchange rate changes		(0.7	)		0.3
Ending balance	$	13.7		$	18.5

	Nine months ended December 31,
	2014			2013
Beginning balance	$	18.3		$	11.6
Additions		-			9.8
Payments		(2.5	)		(3.7	)
Effect of exchange rate changes		(2.1	)		0.8
Ending balance	$	13.7		$	18.5

During the third quarter of fiscal 2015, the Company sold a wind tunnel within the Europe segment, which was previously reported as an asset held for sale, for cash proceeds of $5.8 million and recognized a gain of $3.2 million.

During the three months ended December 31, 2013, the Company recorded asset impairment charges of $2.0 million, primarily related to a manufacturing facility in Germany that the Company plans to close.

During the three and nine months ended December 31, 2014, the Company recorded $0.7 million and $1.2 million, respectively, of restructuring expenses in its South America segment due to employee severance-related costs. The headcount reductions were in response to the economic slowdown in Brazil and reflect the Company’s objective to maintain profitability in the segment despite lower sales volume.

During the fourth quarter of fiscal 2014, the Company approved a plan to close its McHenry, Illinois manufacturing facility, reflecting its focus on operating scale manufacturing facilities to improve overall competitiveness and profitability. The Company has begun to transfer the facility’s current production to other existing North America segment manufacturing facilities. During the three and nine months ended December 31, 2014, the Company recorded $0.6 million and $0.8 million, respectively, of restructuring expenses related to the planned closure, primarily for equipment transfer costs.