Restructuring Plans

9 Months Ended

Jan. 03, 2021

Restructuring and Related Activities [Abstract]

Restructuring and other Exit Charges

Restructuring Plans

As disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2020, the Company committed to restructuring plans aimed at improving operational efficiencies across its lines of business. A substantial portion of these plans are complete with an estimated $10,900 remaining to be incurred by the end of fiscal 2021, mainly related to new plans started in fiscal 2021. Restructuring and exit charges for the third quarter and nine months of fiscal 2021 by reportable segments are as follows:


	Quarter ended January 3, 2021
	Energy Systems		Motive Power		Specialty		Total
Restructuring charges	$	868	$	2,665	$	9	$	3,542
Exit charges	—		11,683		(29)		11,654
Restructuring and other exit charges	$	868	$	14,348	$	(20)	$	15,196


	Nine months ended January 3, 2021
	Energy Systems		Motive Power		Specialty		Total
Restructuring charges	$	2,711	$	3,599	$	138	$	6,448
Exit charges	—		13,192		62		13,254
Restructuring and other exit charges	$	2,711	$	16,791	$	200	$	19,702

A roll-forward of the restructuring reserve is as follows:


Balance as of March 31, 2020	$	3,325
Accrued	6,448
Costs incurred	(5,270)
Foreign currency impact	413
Balance as of January 3, 2021	$	4,916

Exit Charges

Fiscal 2021 Programs

Hagen, Germany

On November 10, 2020, the EnerSys’ Board of Directors approved a plan to substantially close its facility in Hagen, Germany, which produces flooded motive power batteries for forklifts. Management determined that future demand for the motive power batteries produced at this facility was not sufficient, given the conversion from flooded to maintenance free batteries by customers, the existing number of competitors in the market, as well as the near term decline in demand and increased

uncertainty from the pandemic. The Company plans to retain the facility with limited sales, service and administrative functions along with related personnel for the foreseeable future.

The Company currently estimates that the total charges for these actions will amount to approximately $70,000, the majority of which are expected to be recorded by the end of calendar 2021. Cash charges for employee severance related payments, cleanup related to the facility, contractual releases and legal expenses are estimated to be $50,000 and non-cash charges from inventory and equipment write-offs are estimated to be $20,000. These actions will result in the reduction of approximately 200 employees.

During the current quarter, the Company recorded charges relating to severance of $6,168 and $5,515 primarily relating to fixed asset write-offs.

Vijayawada, India

During the second quarter of fiscal 2021, the Company committed to a plan to close its facility in Vijayawada, India to align with its strategic vision for the new line of business structure and footprint and recorded during the second quarter of fiscal 2021, exit charges of $1,509, primarily relating to asset write-offs.

Targovishte, Bulgaria

During fiscal 2019, the Company committed to a plan to close its facility in Targovishte, Bulgaria, which produced diesel-electric submarine batteries. Management determined that the future demand for batteries of diesel-electric submarines was not sufficient given the number of competitors in the market. Of the estimated total charges of $30,000 for this plan, the Company had recorded charges amounting to $20,242 in fiscal 2019, relating to severance and inventory and fixed asset write-offs and an additional $5,123 relating to cash and non-cash charges during fiscal 2020. During the nine months of fiscal 2021, in keeping with its strategy of exiting the manufacture of batteries for diesel-electric submarines, the Company continued to execute further actions which resulted in a non-material net impact from the cash and non-cash charges.

Fiscal 2020 Programs

During fiscal 2020, in keeping with its strategy of exiting the manufacture of batteries for diesel-electric submarines, the Company also sold certain licenses and assets for $2,031 and recorded a net gain of $892, which were reported as other exit charges in our Specialty segment.

During fiscal 2020, the Company also wrote off $5,441 of assets at its Kentucky and Tennessee motive power plants, as a result of its strategic product mix shift from traditional flooded batteries to maintenance free lead acid and lithium batteries.

Richmond, Kentucky Plant Fire

During the current quarter, the Company settled its claims with its insurance carrier relating to the fire that broke out in the battery formation area of the Company's Richmond, Kentucky motive power production facility in fiscal 2020. The total claims, for both property and business interruption, were $46,114, of which $40,564 was received through January 3, 2021. The balance of $3,206 relating to the property claim and $2,344 relating to business interruption was received on January 4, 2021.

The final settlement of insurance recoveries and finalization of costs related to the replacement of property, plant and equipment, resulted in a net gain of $4,397, which was recorded in the current quarter to operating expenses in the Consolidated Condensed Income Statement.

The details of charges and recoveries for fiscal 2021 and fiscal 2020 are as follows:

In fiscal 2020, the Company recorded as receivable, $17,037, consisting of write-offs for damages caused to its fixed assets and inventories, as well as for cleanup, asset replacement and other ancillary activities directly associated with the fire and received $12,000 related to its initial claims.

During the nine months of fiscal 2021, the Company recorded an additional $16,577 as receivable for cleanup and received $18,408 from the insurance carrier.

In addition to the property damage claim, the Company received $12,500 in business interruption claims, of which $5,000 was recorded in fiscal 2020 and $7,500 in the nine months of fiscal 2021, and was credited to cost of goods sold, in the respective periods.