RESTRUCTURING AND RELATED CHARGES AND ASSET IMPAIRMENT CHARGES

Restructuring and Related Charges

Phase 1

As previously set forth in the 2014 Annual Report on Form 10-K, we are implementing restructuring actions in conjunction with our Phase 1 restructuring program to achieve synergies across Kennametal as a result of the TMB acquisition by consolidating operations among both organizations, reducing administrative overhead and leveraging the supply chain. These restructuring actions are expected to be completed by the end of fiscal 2016 and are anticipated to be mostly cash expenditures.

The total pre-tax charges for Phase 1 programs are expected to be in the range of $55 million to $60 million, which is expected to be approximately 50 percent Industrial and 50 percent Infrastructure. Total restructuring and related charges since inception of $44.2 million have been recorded for these Phase 1 programs through March 31, 2015: $27.1 million in Industrial, $14.9 million in Infrastructure, and $2.2 million in Corporate.

Phase 2

As previously set forth in the report for the quarterly period ended December 31, 2014 on Form 10-Q, we are implementing restructuring actions in conjunction with Phase 2 to streamline the Company's cost structure. These initiatives are expected to enhance operational efficiencies through the rationalization of certain manufacturing facilities as well as other employment and cost reduction programs. These restructuring actions are expected to be completed by December 2016 and are anticipated to be mostly cash expenditures.

The total pre-tax charges for Phase 2 programs are expected to be in the range of $90 million to $100 million, which is expected to be approximately 75 percent Industrial and 25 percent Infrastructure. Total restructuring and related charges since inception of $12.0 million have been recorded for these Phase 2 programs through March 31, 2015: $6.1 million in Industrial, $5.7 million in Infrastructure, and $0.2 million in Corporate.

Combined

During the nine months ended March 31, 2015, we recognized total restructuring and related charges of $37.1 million, of this amount, restructuring charges totaled $24.4 million, of which $0.3 million were charges related to inventory disposals and were recorded in cost of goods sold. Total restructuring-related charges of $6.5 million were recorded in cost of goods sold and $6.2 million in operating expense for the nine months ended March 31, 2015.

During the nine months ended March 31, 2014, we recorded restructuring charges of $5.0 million.

The restructuring accrual is recorded in other current liabilities in our condensed consolidated balance sheet and the amount attributable to each segment is as follows:



(in thousands)	June 30, 2014		Expense		Asset Write-Down			Other ⁽²⁾			Translation			Cash Expenditures			March 31, 2015
Industrial
Severance	$	5,815	$	11,565	$	—		$	—		$	(364	)	$	(7,312	)	$	9,704
Facilities	444		1,307		(1,261		)	—			(31		)	(459		)	—
Other	67		37		—			—			(2		)	(102		)	—
Total Industrial	$	6,326	$	12,909	$	(1,261	)	$	—		$	(397	)	$	(7,873	)	$	9,704

Infrastructure
Severance	$	2,458	$	10,813	$	—		$	(459	)	$	(350	)	$	(6,749	)	$	5,713
Facilities	190		661		(522		)	—			(16		)	(279		)	34
Other	28		6		—			—			(3		)	(31		)	—
Total Infrastructure	$	2,676	$	11,480	$	(522	)	$	(459	)	$	(369	)	$	(7,059	)	$	5,747
Total	$	9,002	$	24,389	$	(1,783	)	$	(459	)	$	(766	)	$	(14,932	)	$	15,451

(2) Special termination benefit charge for one of our U.S.-based benefit pension plans resulting from a plant closure - see Note 10.



(in thousands)	June 30, 2013		Expense		Asset Write-Down		Other		Translation		Cash Expenditures			March 31, 2014
Industrial
Severance	$	—	$	2,235	$	—	$	—	$	2	$	(1,074	)	$	1,163
Facilities	—		325		—		—		3		—			328
Other	—		76		—		—		1		(1		)	76
Total Industrial	$	—	$	2,636	$	—	$	—	$	6	$	(1,075	)	$	1,567

Infrastructure
Severance	$	—	$	2,016	$	—	$	—	$	2	$	(969	)	$	1,049
Facilities	—		293		—		—		3		—			296
Other	—		68		—		—		—		—			68
Total Infrastructure	$	—	$	2,377	$	—	$	—	$	5	$	(969	)	$	1,413
Total	$	—	$	5,013	$	—	$	—	$	11	$	(2,044	)	$	2,980

Asset impairment Charges

See discussion on Infrastructure segment goodwill and other intangible asset impairment charges in Note 18.