RESTRUCTURING AND RELATED CHARGES AND ASSET IMPAIRMENT CHARGES

Restructuring and Related Charges

Phase 1

We implemented 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 were substantially completed in fiscal 2016 and were mostly cash expenditures.

Total restructuring and related charges since inception of $59.3 million have been recorded for these Phase 1 programs through June 30, 2016: $30.7 million in Industrial, $26.2 million in Infrastructure, and $2.4 million in Corporate.

Ongoing restructuring programs

We are currently implementing restructuring actions to streamline the Company's cost structure. These initiatives are expected to improve the alignment of our cost structure with the current operating environment through rationalization and consolidation of certain manufacturing facilities and through headcount reductions; enhancement of operational efficiencies through an enterprise-wide cost reduction program; and other employment and cost reduction programs. These restructuring actions are expected to be completed by December of fiscal 2019 and are anticipated to be mostly cash expenditures.

The total pre-tax charges for these programs are expected to be in the range of $105 million to $125 million, which is expected to be approximately 65 percent Industrial and 35 percent Infrastructure. Total restructuring and related charges since inception of $71.4 million have been recorded for these programs through June 30, 2016: $41.2 million in Industrial, $23.3 million in Infrastructure and $6.9 million in Corporate.

Combined

During 2016, we recognized total restructuring and related charges of $53.5 million, of this amount, restructuring charges totaled $30.0 million. Total restructuring-related charges of $7.3 million were recorded in cost of goods sold and $16.2 million in operating expense during 2016.

During 2015, we recognized total restructuring and related charges of $58.1 million, of this amount, restructuring charges totaled $42.1 million, of which $1.5 million were charges related to inventory disposals and were recorded in cost of goods sold. Total restructuring-related charges of $8.2 million were recorded in cost of goods sold and $7.8 million in operating expense during 2015.

During 2014, we recorded $19.1 million restructuring and related charges, of this amount, restructuring charges totaled $17.8 million, of which $0.2 million were charges related to inventory disposals and were recorded in cost of goods sold. Total restructuring-related charges of $1.2 million were recorded in cost of goods sold and $0.1 million in operating expense during 2014.

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



(in thousands)	June 30, 2015		Expense		Asset Write-Down			Other ⁽²⁾			Translation			Cash Expenditures			June 30, 2016
Industrial
Severance	$	13,456	$	17,322	$	—		$	(347	)	$	(140	)	$	(21,202	)	$	9,089
Facilities	—		330		(780		)	—			—			450			—
Other	28		297		—			—			(5		)	579			899
Total Industrial	$	13,484	$	17,949	$	(780	)	$	(347	)	$	(145	)	$	(20,173	)	$	9,988

Infrastructure
Severance	$	7,173	$	7,424	$	—		$	(201	)	$	(60	)	$	(9,035	)	$	5,301
Facilities	131		4,515		(3,914		)	—			—			(699		)	33
Other	—		127		—			—			(2		)	256			381
Total Infrastructure	7,304		12,066		(3,914		)	(201		)	(62		)	(9,478		)	5,715
Total	$	20,788	$	30,015	$	(4,694	)	$	(548	)	$	(207	)	$	(29,651	)	$	15,703

(2) Special termination benefit charge and settlement charge for one of our U.S.-based benefit pension plans resulting from executive retirement - see Note 13.



(in thousands)	June 30, 2014		Expense		Asset Write-Down			Other ⁽³⁾			Translation			Cash Expenditures			June 30, 2015
Industrial
Severance	$	5,815	$	20,713	$	—		$	—		$	(328	)	$	(12,744	)	$	13,456
Facilities	444		2,277		(2,231		)	—			(15		)	(475		)	—
Other	67		77		—			—			(2		)	(114		)	28
Total Industrial	$	6,326	$	23,067	$	(2,231	)	$	—		$	(345	)	$	(13,333	)	$	13,484

Infrastructure
Severance	$	2,458	$	14,027	$	—		$	(459	)	$	(223	)	$	(8,630	)	$	7,173
Facilities	190		4,969		(3,638		)	—			(32		)	(1,358		)	131
Other	28		—		—			—			(3		)	(25		)	—
Total Infrastructure	2,676		18,996		(3,638		)	(459		)	(258		)	(10,013		)	7,304
Total	$	9,002	$	42,063	$	(5,869	)	$	(459	)	$	(603	)	$	(23,346	)	$	20,788

(3) Special termination benefit charge for one of our U.S.-based benefit pension plans resulting from a plant closure - see Note 13.

Asset impairment Charges

See discussion on goodwill and other intangible asset impairment charges in Note 2.

During 2016, we identified specific machinery and equipment that was no longer being utilized in the manufacturing organization of which we disposed by abandonment. As a result of this review, we recorded property, plant, and equipment impairment charges of $5.4 million during 2016, which has been presented in restructuring and asset impairment charges in our consolidated statement of income.