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Restructuring and other impairment charges | 12 Months Ended
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Dec. 31, 2014
Restructuring and Related Activities [Abstract] |
Restructuring and other impairment charges | Restructuring and other impairment charges 2014 Manufacturing Footprint Realignment Plan On April 28, 2014, the Board of Directors approved a restructuring plan (the “2014 Manufacturing Footprint Realignment Plan”) involving the consolidation of operations and a related reduction in workforce at certain of the Company’s facilities, and the relocation of manufacturing operations from certain higher-cost locations to existing lower-cost locations. These actions commenced in the quarter ended June 29, 2014 and are expected to be substantially completed by the end of 2017. The Company estimates that it will incur aggregate pre-tax charges in connection with the 2014 Manufacturing Footprint Realignment Plan of approximately $37 million to $44 million, of which an estimated $26 million to $31 million are expected to result in future cash outlays. Most of these charges are expected to be incurred prior to the end of 2016. The following table provides a summary of the Company’s current cost estimates by major type of expense associated with the 2014 Manufacturing Footprint Realignment Plan:
Type of expense | Total estimated amount expected to be incurred
Termination benefits | $11 million to $13 million
Facility closure and other exit costs (1) | $2 million to $3 million
Accelerated depreciation charges | $10 million to $11 million
Other (2) | $14 million to $17 million
| $37 million to $44 million
(1) | Includes costs to transfer product lines among facilities and outplacement and employee relocation costs.
(2) | Consists of other costs directly related to the Plan, including project management, legal and regulatory costs.
For the twelve months ended December 31, 2014, the Company recorded expenses of $14.2 million related to the 2014 Manufacturing Footprint Realignment Plan. Of this amount, $9.3 million related to termination benefits and was included in restructuring expense and $4.9 million related to accelerated depreciation and certain other costs resulting from the plan and was included in cost of goods sold. As of December 31, 2014, the Company had a restructuring reserve of $9.1 million in connection with this plan, all of which relates to termination benefits. As the 2014 Manufacturing Footprint Realignment Plan progresses, management will reevaluate the estimated expenses and charges set forth above, and may revise its estimates, as appropriate, consistent with generally accepted accounting principles. 2014 European Restructuring Plan On February 27, 2014, the Company committed to a restructuring plan (the “2014 European Restructuring Plan”), which impacts certain administrative functions in Europe and involves the consolidation of operations and a related reduction in workforce at certain of the Company’s European facilities. The Company recorded charges of $7.8 million for the twelve months ended December 31, 2014 related to this program, primarily pertaining to termination benefits. The Company expects future restructuring expenses associated with the 2014 European Restructuring Plan, if any, to be nominal. As of December 31, 2014, the Company had a reserve of $0.4 million in connection with the 2014 European Restructuring Plan. The Company expects to complete this plan in 2015. Other 2014 Restructuring Programs In June 2014, the Company initiated programs to consolidate locations in Australia and terminate certain European distributor agreements in an effort to reduce costs. As a result of these actions, the Company expects to incur an aggregate of approximately $4 million in restructuring and other impairment charges over the term of these programs, of which $3.6 million has been incurred through December 31, 2014. These programs include costs related to termination benefits, contract termination costs and other exit costs. As of December 31, 2014, the Company has a reserve of $0.9 million in connection with these programs. The Company expects to complete the programs in 2015. 2013 Restructuring Charges In 2013, the Company initiated restructuring programs to consolidate administrative and manufacturing facilities in North America and warehouse facilities in Europe and terminate certain European distributor agreements in an effort to reduce costs. As a result of these actions, the Company estimates that it will incur an aggregate of approximately $11 to $12 million in restructuring and other impairment charges over the term of these programs, of which $11.0 million was incurred through December 31, 2014. These programs entail costs related to termination benefits, contract termination costs and post-closing obligations associated with acquired businesses. As of December 31, 2014, the Company had a reserve of $0.9 million in connection with these projects. The Company expects to complete the programs in 2015. LMA Restructuring Program In connection with the acquisition of substantially all of the assets of LMA International N.V. (the “LMA business”) in 2012, the Company commenced a program (the "LMA Restructuring Program") related to the integration of the LMA business and the Company’s other businesses. The program focuses on the closure of the LMA business's corporate functions and the consolidation of manufacturing, sales, marketing, and distribution functions in North America, Europe and Asia. A reconciliation of the changes in accrued liabilities associated with the LMA Restructuring Program from December 31, 2012 through December 31, 2014 is set forth in the following table:
| Termination benefits |  | Facility Closure Costs |  | Contract Termination Costs |  | Other Restructuring Costs |  | Total
| (Dollars in thousands)
Balance at December 31, 2012 | $ | 1,744 |  |  | $ | — |  |  | $ | 277 |  |  | $ | 12 |  |  | $ | 2,033 |
Subsequent accruals | 3,282 |  |  | 788 |  |  | 7,906 |  |  | 176 |  |  | 12,152 |
Cash payments | (4,461 | ) |  | (362 | ) |  | (4,560 | ) |  | (164 | ) |  | (9,547 | )
Foreign currency translation | (13 | ) |  | 1 |  |  | 63 |  |  | (8 | ) |  | 43 |
Balance at December 31, 2013 | 552 |  |  | 427 |  |  | 3,686 |  |  | 16 |  |  | 4,681 |
Subsequent accruals (reversals) | (29 | ) |  | (112 | ) |  | (3,188 | ) |  | — |  |  | (3,329 | )
Cash payments | (503 | ) |  | (317 | ) |  | (260 | ) |  | (4 | ) |  | (1,084 | )
Foreign currency translation | (20 | ) |  | 2 |  |  | (26 | ) |  | — |  |  | (44 | )
Balance at December 31, 2014 | $ | — |  |  | $ | — |  |  | $ | 212 |  |  | $ | 12 |  |  | $ | 224 |
During the twelve months ended December 31, 2014, the Company reversed $3.2 million in contract termination costs due to the favorable settlement of a terminated distributor agreement. As of December 31, 2014, the Company incurred net aggregate restructuring and other impairment charges over the term of this program of $11.4 million. The Company expects future restructuring expenses associated with this program, if any, to be nominal. The Company expects to complete the program in 2015. 2012 Restructuring Charges In 2012, the Company initiated a program to improve the effectiveness of its supply chain by consolidating its three North American warehouses into one centralized warehouse and to lower costs and improve operating efficiencies through the termination of certain distributor agreements in Europe, the closure of certain North American facilities, and workforce reductions. The Company has incurred an aggregate of approximately $6.3 million over the term of this program. The Company expects future restructuring expenses associated with this program, if any, to be nominal. As of December 31, 2014, the Company had a reserve of $0.6 million in connection with the program. The Company expects to complete this program in 2015. 2011 Restructuring Program In 2011, the Company initiated a restructuring program at three facilities to consolidate operations and reduce costs. In connection with this program, the Company recorded contract termination costs of approximately $2.6 million associated with a lease termination, as the Company had vacated 50% of the premises during 2011. In addition, the Company recorded approximately $0.4 million for employee termination benefits in connection with workforce consolidations. In 2013, the Company recorded an additional $0.8 million in contract termination costs and has completely exited the leased facility. This program was completed in 2013. 2007 Arrow Integration Program In connection with the Company’s acquisition of Arrow International, Inc. (“Arrow”) in 2007, the Company implemented a program in 2007 to integrate Arrow’s businesses into the Company’s other businesses. The aspects of this program that affected legacy Teleflex employees and facilities were charged to earnings and classified as restructuring and other impairment charges. A net credit of $1.9 million with respect to the program was recorded during the year ended December 31, 2012, primarily due to a settlement of a dispute involving the termination of a European distributor agreement that was established in connection with the Company's acquisition of Arrow. This program was completed in 2013. Impairment Charges The Company incurred the following asset impairment charges during the twelve months ended December 31, 2013. These asset impairments were measured at fair value using significant unobservable inputs that are categorized as Level 3 under the fair value hierarchy, which is described in Note 10 to the consolidated financial statements.
• | During the fourth quarter 2013, the Company recorded a $2.9 million IPR&D charge following its decision to abandon a research and development project associated with the Company’s vascular business.
• | During the third quarter 2013, the Company recorded $3.5 million in impairment charges related to assets held for sale that had a carrying value in excess of their appraised fair value.
• | During the first quarter 2013, the Company recorded a $4.5 million IPR&D charge pertaining to a research and development project associated with the Company's acquisition of substantially all of the assets of Axiom Technology Partners LLC because technological feasibility had not yet been achieved and the Company determined that the subject technology had no future alternative use.
There were no impairment charges recorded for the twelve months ended December 31, 2014 or 2012. The restructuring and other impairment charges recognized for the twelve months ended December 31, 2014, 2013 and 2012 consisted of the following:
| 2014
(in thousands) | Termination Benefits |  | Facility Closure Costs |  | Contract Termination Costs |  | Other Exit Costs |  | Total
2014 Manufacturing footprint realignment plan | $ | 9,200 |  |  | $ | — |  |  | $ | — |  |  | $ | 60 |  |  | $ | 9,260 |
2014 European restructuring plan | 7,237 |  |  | 1 |  |  | 345 |  |  | 225 |  |  | 7,808 |
Other 2014 restructuring programs | 552 |  |  | — |  |  | 2,754 |  |  | 244 |  |  | 3,550 |
2013 Restructuring programs | 562 |  |  | — |  |  | 249 |  |  | 22 |  |  | 833 |
LMA restructuring program | (29 | ) |  | (112 | ) |  | (3,188 | ) |  | — |  |  | (3,329 | )
2012 Restructuring program | (619 | ) |  | 354 |  |  | — |  |  | — |  |  | (265 | )
2011 Restructuring program | — |  |  | 12 |  |  | — |  |  | — |  |  | 12 |
Total restructuring and other impairment charges | $ | 16,903 |  |  | $ | 255 |  |  | $ | 160 |  |  | $ | 551 |  |  | $ | 17,869 |
| 2013
(in thousands) | Termination Benefits |  | Facility Closure Costs |  | Contract Termination Costs |  | Other Exit Costs |  | Total
2013 Restructuring programs | 4,787 |  |  | — |  |  | 3,326 |  |  | 2,117 |  |  | 10,230 |
LMA restructuring program | 3,282 |  |  | 788 |  |  | 7,906 |  |  | 176 |  |  | 12,152 |
2012 Restructuring program | 2,993 |  |  | 935 |  |  | 296 |  |  | 5 |  |  | 4,229 |
2011 Restructuring | — |  |  | 42 |  |  | 728 |  |  | — |  |  | 770 |
2007 Arrow integration program | — |  |  | 230 |  |  | — |  |  | — |  |  | 230 |
| 11,062 |  |  | 1,995 |  |  | 12,256 |  |  | 2,298 |  |  | 27,611 |
Impairment charges | — |  |  | — |  |  | — |  |  | 10,841 |  |  | 10,841 |
Total restructuring and other impairment charges | $ | 11,062 |  |  | $ | 1,995 |  |  | $ | 12,256 |  |  | $ | 13,139 |  |  | $ | 38,452 |
| 2012
(in thousands) | Termination Benefits |  | Facility Closure Costs |  | Contract Termination Costs |  | Other Exit Costs |  | Total
LMA restructuring program | $ | 2,229 |  |  | $ | — |  |  | $ | 274 |  |  | $ | 12 |  |  | 2,515 |
2012 Restructuring program | 1,681 |  |  | — |  |  | 758 |  |  | 20 |  |  | 2,459 |
2007 Arrow integration program | 20 |  |  | 230 |  |  | (2,166 | ) |  | (21 | ) |  | (1,937 | )
Total restructuring and other impairment charges | $ | 3,930 |  |  | $ | 230 |  |  | $ | (1,134 | ) |  | $ | 11 |  |  | $ | 3,037 |
Termination benefits include employee retention payments and severance payments and benefits for terminated employees. Facility closure costs include general operating costs incurred subsequent to production shut-down as well as equipment relocation and other associated costs. Contract termination costs include costs associated with terminating existing leases and distributor agreements. Other costs include legal, outplacement and employee relocation costs and other employee-related costs. Restructuring and other impairment charges by reportable segment for the twelve months ended December 31, 2014, 2013, and 2012 are set forth in the following table:
| 2014 |  | 2013 |  | 2012
| (Dollars in thousands)
Restructuring and other impairment charges |  |  |  |  |
Vascular North America | $ | 7,069 |  |  | $ | 5,348 |  |  | $ | (1,120 | )
Anesthesia/Respiratory North America | 1,379 |  |  | 3,207 |  |  | 983 |
Surgical North America | — |  |  | 6,525 |  |  | 278 |
EMEA | 6,375 |  |  | 16,122 |  |  | 1,995 |
Asia | 1,305 |  |  | 603 |  |  | 442 |
OEM | — |  |  | 588 |  |  | 83 |
All other | 1,741 |  |  | 6,059 |  |  | 376 |
Total restructuring and other impairment charges | $ | 17,869 |  |  | $ | 38,452 |  |  | $ | 3,037 |

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- Definition The entire disclosure of costs incurred for restructuring including, but not limited to, exit and disposal activities, remediation, implementation, integration, asset impairment, and charges against earnings from the write-down of assets. + References No definition available. + Details
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