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Restructuring Charges | 12 Months Ended
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Dec. 31, 2017
Restructuring Charges [Abstract] |
Restructuring Charges | 12. Restructuring Charges The Company incurred restructuring costs in both continuing and discontinued operations. The discussion in this note relates to the combination of both continuing and discontinued operations unless otherwise noted. Restructuring costs related to discontinued operations are recorded in discontinued operations within the Company’s Consolidated Condensed Statements of Earnings and are discussed in Note 13, Discontinued Operations, in more detail. Between March 2014 and 2017, the Company executed a restructuring plan (“2014 Restructuring Plan” or “Plan”) to eliminate underperforming operations, consolidate manufacturing facilities, and improve efficiencies within the Company. The Company determined that it had redundant manufacturing capabilities in both North America and Europe and that it could lower costs and operate more efficiently by consolidating into fewer facilities. Eight facilities were identified for consolidation in the Flavors & Fragrances segment, four in North America and four in Europe. Closures have been completed in Indianapolis, Indiana, United States; Cornwall, Mississauga, and Halton Hills, Canada; Bremen, Germany; and Milan, Italy. As part of the Plan, the Company eventually sold its European Natural Ingredients business, including its facilities in Elburg, the Netherlands, and Marchais, France, as discussed below. In addition, the Company discontinued one of the businesses in the Color segment, located near Leipzig, Germany, because it did not fit with the Company’s long-term strategic plan and it had generated losses for several years. In 2015, the Company identified additional opportunities to consolidate manufacturing operations at one of the Color segment’s facilities in Europe and to eliminate additional positions in the European Flavors & Fragrances businesses. The Company has completed all of the above-mentioned activities and closures, as of December 31, 2017. Based on this Plan, the Company determined that certain long-lived assets associated with the underperforming operations were impaired. The Company reduced the carrying amounts of these assets to their aggregate respective fair values, which were determined based on independent market valuations. Also, certain machinery and equipment was identified to be disposed of at the time of the facility closures and the associated depreciation for these assets has been accelerated. The Company recorded long-lived asset impairments, including the impairment charges and accelerated depreciation of $2.2 million, $1.9 million, and $14.5 million during the years ended December 31, 2017, 2016, and 2015, respectively. Since initiating the Plan, the Company has recorded $89 million of long-lived asset impairments, including the impairment charges and accelerated depreciation. In addition, certain intangible assets, inventory, and other current assets were also determined to be impaired and were written down. The Company has also incurred employee separation and other restructuring costs as a result of this Plan. The Company has eliminated headcount related to direct and indirect labor at manufacturing sites by approximately 400 positions at the affected facilities, primarily in the Flavors & Fragrances segment. In connection with the 2014 Restructuring Plan, the Company approved a plan to dispose of a certain business, located near Leipzig, Germany, within the Color segment. Production ceased in 2014 and the business met the criteria to be reported as a discontinued operation. In 2016, the facility and remaining assets were sold and the entity was liquidated. During the three months ended March 31, 2017, the Company sold its European Natural Ingredients business (also known as the European Dehydrated Vegetable business), a business in the Flavors & Fragrances segment. This business had two facilities, located in Marchais, France, and Elburg, the Netherlands. As part of the 2014 Restructuring Plan, the Company had concluded that the European Natural Ingredients business had not generated significant profits for several years and did not fit with the Company’s long-term strategic plan. The Company completed the sale of this business on March 27, 2017, for a de minimis amount and has recognized a non-cash loss of approximately $21.6 million. As of December 31, 2017, the Company has recorded assets held for sale of land, buildings, and equipment of $2 million related to the 2014 Restructuring Plan. In accordance with GAAP, the Company recorded total restructuring costs of $36.5 million, $11.1 million, and $42.8 million for the years ended December 31, 2017, 2016, and 2015, respectively. Since initiating the 2014 Restructuring Plan, the Company has incurred $189 million of restructuring costs as of December 31, 2017. The Company does not expect any restructuring costs in 2018. Since initiating the Plan, the Company has realized total savings of approximately $22 million as of December 31, 2017. In 2017, the Company realized a de minimis amount of savings, but expects additional savings of approximately $4 million to $5 million in 2018. Expected savings have shifted from 2017 to 2018 primarily due to the delay in closing the Indianapolis facility. The Company continues its efforts to optimize production at the consolidated sites. The Company evaluates performance based on operating income of each segment before restructuring and other costs. All restructuring and other costs related to continuing operations are recorded in Corporate & Other. The following table summarizes the restructuring expense by segment and discontinued operations for the years ended December 31, 2017, 2016, and 2015:
(In thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Flavors & Fragrances |  | $ | 36,278 |  |  | $ | 13,719 |  |  | $ | 37,309 |
Color |  |  | - |  |  |  | 81 |  |  |  | 2,113 |
Asia Pacific |  |  | - |  |  |  | - |  |  |  | 82 |
Corporate and Other |  |  | 238 |  |  |  | 751 |  |  |  | 3,299 |
Total Continuing Operations |  |  | 36,516 |  |  |  | 14,551 |  |  |  | 42,803 |
Discontinued Operations |  |  | - |  |  |  | (3,485 | ) |  |  | 43 |
Total Restructuring |  | $ | 36,516 |  |  | $ | 11,066 |  |  | $ | 42,846 |
The Company recorded restructuring costs in continuing operations for the year ended December 31, 2017, as follows:
(In thousands) |  | Selling & Administrative |  |  | Cost of Products Sold |  |  | Total |
Employee separation |  | $ | (638 | ) |  | $ | - |  |  | $ | (638 | )
Long-lived asset impairment |  |  | 2,435 |  |  |  | - |  |  |  | 2,435 |
Loss on sale of business |  |  | 21,563 |  |  |  | - |  |  |  | 21,563 |
Write-down of inventory |  |  | - |  |  |  | 2,889 |  |  |  | 2,889 |
Other costs(1) |  |  | 10,267 |  |  |  | - |  |  |  | 10,267 |
Total |  | $ | 33,627 |  |  | $ | 2,889 |  |  | $ | 36,516 |
| (1) | Other costs include decommissioning costs, professional services, temporary labor, moving costs, and other related costs.
The Company recorded restructuring costs in continuing operations for the year ended December 31, 2016, as follows:
(In thousands) |  | Selling & Administrative |  |  | Cost of Products Sold |  |  | Total |
Employee separation |  | $ | 1,279 |  |  | $ | - |  |  | $ | 1,279 |
Long-lived asset impairment |  |  | 1,659 |  |  |  | - |  |  |  | 1,659 |
Loss on asset sales |  |  | 212 |  |  |  | - |  |  |  | 212 |
Write-down of inventory |  |  | - |  |  |  | 2,065 |  |  |  | 2,065 |
Other costs(1) |  |  | 9,336 |  |  |  | - |  |  |  | 9,336 |
Total |  | $ | 12,486 |  |  | $ | 2,065 |  |  | $ | 14,551 |
| (1) | Other costs include decommissioning costs, professional services, moving costs, and other related costs.
The Company recorded restructuring costs in continuing operations for the year ended December 31, 2015, as follows:
(In thousands) |  | Selling & Administrative |  |  | Cost of Products Sold |  |  | Total |
Employee separation |  | $ | 7,155 |  |  | $ | - |  |  | $ | 7,155 |
Long-lived asset impairment |  |  | 14,551 |  |  |  | - |  |  |  | 14,551 |
Gain on asset sales |  |  | (1,301 | ) |  |  | - |  |  |  | (1,301 | )
Write-down of inventory |  |  | - |  |  |  | 6,098 |  |  |  | 6,098 |
Other costs(1) |  |  | 16,300 |  |  |  | - |  |  |  | 16,300 |
Total |  | $ | 36,705 |  |  | $ | 6,098 |  |  | $ | 42,803 |
| (1) | Other costs include decommissioning costs, professional services, moving costs, and other related costs.
The following table summarizes the accrual activity for the restructuring liabilities for the years ended December 31, 2017 and 2016:
(In thousands) |  | Employee Separations |  |  | Other Costs |  |  | Total |
Balance as of December 31, 2015 |  | $ | 10,260 |  |  | $ | 912 |  |  | $ | 11,172 |
Expense activity |  |  | 1,279 |  |  |  | 9,336 |  |  |  | 10,615 |
Cash spent |  |  | (4,434 | ) |  |  | (9,678 | ) |  |  | (14,112 | )
Translation adjustment |  |  | (146 | ) |  |  | - |  |  |  | (146 | )
Balance as of December 31, 2016 |  |  | 6,959 |  |  |  | 570 |  |  |  | 7,529 |
Expense activity |  |  | (4,435 | ) |  |  | 9,735 |  |  |  | 5,300 |
Cash spent |  |  | (2,403 | ) |  |  | (9,001 | ) |  |  | (11,404 | )
Translation adjustment |  |  | 95 |  |  |  | - |  |  |  | 95 |
Balance as of December 31, 2017 |  | $ | 216 |  |  | $ | 1,304 |  |  | $ | 1,520 |

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -URI http://asc.fasb.org/topic&trid=2175745 + Details
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