Restructuring and Asset Impairment | 3 Months Ended |
Mar. 29, 2015 |
Restructuring and Related Activities [Abstract] | |
Restructuring and Asset Impairment | Restructuring and Asset Impairment |
The Company has engaged in a number of restructuring actions over the past several years. Actions initiated in 2015 and 2014 are reported as “2015 Actions” and “2014 Actions,” respectively. Actions initiated prior to 2014, all of which were substantially complete at March 29, 2015, are reported as “2013 and Earlier Actions.” |
Following are the total restructuring and asset impairment charges/(credits), net of adjustments, and gains on dispositions recognized by the Company during the periods presented: |
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| 2015 | 2014 | | | | | | | | |
| | 29-Mar-15 | | 30-Mar-14 | | | | | | | | |
Restructuring/Asset impairment: | | | | | | | | | | | | |
2015 Actions | | $ | (851 | ) | | $ | — | | | | | | | | | |
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2014 Actions | | 342 | | | 1,399 | | | | | | | | | |
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2013 and Earlier Actions | | 150 | | | 593 | | | | | | | | | |
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Restructuring/Asset impairment (income)/charges | | $ | (359 | ) | | $ | 1,992 | | | | | | | | | |
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Income tax benefit | | $ | (11,591 | ) | | $ | (411 | ) | | | | | | | | |
Costs attributable to noncontrolling interests, net of tax | | (15 | ) | | (4 | ) | | | | | | | | |
Total impact of restructuring/asset impairment (income)/charges, net of tax | | $ | (11,965 | ) | | $ | 1,577 | | | | | | | | | |
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Pre-tax restructuring and asset impairment charges are included in “Restructuring/Asset impairment charges” in the Condensed Consolidated Statements of Income. |
The Company expects to recognize future additional charges totaling approximately $3,100 in connection with announced restructuring actions, when recognizable in accordance with GAAP, and believes that the majority of these charges will be incurred and paid by the end of 2015. The Company continually evaluates its cost structure, including its manufacturing capacity, and additional restructuring actions may be undertaken. |
2015 Actions |
During 2015, the Company announced the closure of a rigid paper facility in the United States (part of the Consumer Packaging segment). The Company also sold a portion of its metal ends and closures business in the United States (part of the Consumer Packaging segment). In addition, approximately 102 positions were eliminated in the first quarter of 2015 in conjunction with the Company's announced organizational effectiveness efforts, which are on-going. |
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Below is a summary of 2015 Actions and related expenses by segment and by type incurred and estimated to be incurred through completion. |
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2015 Actions | | First Quarter 2015 | | Estimated | | | | | | | | |
Total Cost | | | | | | | | |
Severance and Termination Benefits | | | | | | | | | | | | |
Consumer Packaging | | $ | 2,201 | | | $ | 4,101 | | | | | | | | | |
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Paper and Industrial Converted Products | | 3,028 | | | 3,028 | | | | | | | | | |
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Corporate | | 1,166 | | | 1,616 | | | | | | | | | |
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Asset Impairment / Disposal of Assets | | | | | | | | | | | | |
Consumer Packaging | | (7,331 | ) | | (7,331 | ) | | | | | | | | |
Paper and Industrial Converted Products | | 2 | | | 2 | | | | | | | | | |
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Other Costs | | | | | | | | | | | | |
Consumer Packaging | | 75 | | | 175 | | | | | | | | | |
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Paper and Industrial Converted Products | | 8 | | | 8 | | | | | | | | | |
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Total Charges and Adjustments | | $ | (851 | ) | | $ | 1,599 | | | | | | | | | |
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The following table sets forth the activity in the 2015 Actions restructuring accrual included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets: |
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2015 Actions | | Severance | | Asset | | Other | | Total |
and | Impairment/ | Costs |
Termination | Disposal | |
Accrual Activity | | Benefits | | of Assets | | |
2015 Year to Date | | | |
Liability at December 31, 2014 | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
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2015 charges | | 6,395 | | | (7,329 | ) | | 83 | | | (851 | ) |
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Cash receipts/(payments) | | (2,079 | ) | | 29,128 | | | (83 | ) | | 26,966 | |
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Asset write downs/disposals | | — | | | (21,799 | ) | | — | | | (21,799 | ) |
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Foreign currency translation | | (78 | ) | | — | | | — | | | (78 | ) |
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Liability at March 29, 2015 | | $ | 4,238 | | | $ | — | | | $ | — | | | $ | 4,238 | |
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Included in "Asset Impairment/Disposal of Assets" above is a gain of $7,331 from the sale of a portion of the Company's metal ends and closures business, including two production facilities in Canton, Ohio. The Company received proceeds of $29,128 from the sale of this business. Assets disposed of in connection with the sale included: net fixed assets of $9,806, inventory of $7,051, goodwill of $1,727, and other intangible assets of $3,516. Liabilities of $303 were assumed by the buyer and disposed of under the terms of the sale. Beneficial tax attributes associated with this disposition provided an income tax benefit of approximately $9,200. |
"Other costs" consist primarily of costs related to plant closures including equipment removal, utilities, plant security, property taxes and insurance. The Company expects to pay the majority of the remaining 2015 Actions restructuring costs by the end of 2015 using cash generated from operations. |
2014 Actions |
During 2014, the Company announced the closures of a tube and core plant in Canada (part of the Paper and Industrial Converted Products segment); a molded foam plant in the United States and a temperature-assured packaging plant in the United States (both part of the Protective Solutions segment); and two recycling facilities - one in the United States and one in Brazil (both part of the Paper and Industrial Converted Products segment). The Consumer Packaging segment also realized significant cash and non-cash restructuring charges as the result of halting the planned start up of a rigid paper facility in Europe following the acquisition of Weidenhammer Packaging Group. In addition, the Company continued to realign its cost structure, resulting in the elimination of approximately 125 positions. |
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Below is a summary of 2014 Actions and related expenses by segment and by type incurred and estimated to be incurred through completion. |
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2014 Actions | | First Quarter 2015 | | First Quarter 2014 | | Total | | Estimated |
Incurred | Total Cost |
to Date | |
Severance and Termination Benefits | | | | | | | | |
Consumer Packaging | | $ | — | | | $ | 650 | | | $ | 850 | | | $ | 850 | |
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Display and Packaging | | — | | | — | | | 594 | | | 594 | |
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Paper and Industrial Converted Products | | 99 | | | 265 | | | 3,376 | | | 3,376 | |
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Protective Solutions | | (32 | ) | | — | | | 729 | | | 729 | |
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Asset Impairment / Disposal of Assets | | | | | | | | |
Consumer Packaging | | — | | | — | | | 2,446 | | | 2,446 | |
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Paper and Industrial Converted Products | | — | | | 473 | | | 781 | | | 781 | |
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Protective Solutions | | 33 | | | — | | | 368 | | | 368 | |
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Other Costs | | | | | | | | |
Consumer Packaging | | 32 | | | 11 | | | 5,278 | | | 5,328 | |
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Display and Packaging | | — | | | — | | | 5 | | | 5 | |
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Paper and Industrial Converted Products | | 115 | | | — | | | 762 | | | 812 | |
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Protective Solutions | | 95 | | | — | | | 432 | | | 532 | |
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Total Charges and Adjustments | | $ | 342 | | | $ | 1,399 | | | $ | 15,621 | | | $ | 15,821 | |
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The following table sets forth the activity in the 2014 Actions restructuring accrual included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets: |
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2014 Actions | | Severance | | Asset | | Other | | Total |
and | Impairment/ | Costs |
Termination | Disposal | |
Accrual Activity | | Benefits | | of Assets | | | |
2015 Year to Date | | | |
Liability at December 31, 2014 | | $ | 859 | | | $ | — | | | $ | 463 | | | $ | 1,322 | |
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2015 charges | | 111 | | | 33 | | | 293 | | | 437 | |
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Adjustments | | (44 | ) | | — | | | (51 | ) | | (95 | ) |
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Cash receipts/(payments) | | (451 | ) | | — | | | (690 | ) | | (1,141 | ) |
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Asset write downs/disposals | | — | | | (33 | ) | | — | | | (33 | ) |
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Foreign currency translation | | (11 | ) | | — | | | (15 | ) | | (26 | ) |
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Liability at March 29, 2015 | | $ | 464 | | | $ | — | | | $ | — | | | $ | 464 | |
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Included in "Asset Impairment/Disposal of Assets" above is impairment of a former temperature-assured packaging facility in the United States. “Other costs” consist primarily of costs related to plant closures including equipment removal, utilities, plant security, property taxes and insurance. The Company expects to pay the majority of the remaining 2014 Actions restructuring costs by the end of 2015 using cash generated from operations. |
2013 and Earlier Actions |
2013 and Earlier Actions are comprised of a number of plant closures and workforce reductions initiated prior to 2014. Charges for these actions in both 2015 and 2014 relate primarily to the cost of plant closures including severance, equipment removal, plant security, property taxes and insurance. Partially offsetting these charges were gains from the sale of a former service center in Finland, closed in 2011. |
The Company expects to recognize future pretax charges of approximately $450 associated with 2013 and Earlier Actions. |
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Below is a summary of expenses/(income) incurred by segment for 2013 and Earlier Actions for the three-month periods ended March 29, 2015 and March 30, 2014. |
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2013 & Earlier Actions | | First Quarter 2015 | | First Quarter 2014 | | | | | | | | |
Consumer Packaging | | $ | — | | | $ | (1 | ) | | | | | | | | |
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Display and Packaging | | — | | | 247 | | | | | | | | | |
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Paper and Industrial Converted Products | | 150 | | | 296 | | | | | | | | | |
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Protective Solutions | | — | | | 51 | | | | | | | | | |
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Total Charges and Adjustments | | $ | 150 | | | $ | 593 | | | | | | | | | |
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The accrual for 2013 and Earlier Actions totaled $1,542 and $1,990 at March 29, 2015 and December 31, 2014, respectively, and is included in “Accrued expenses and other” on the Company’s Condensed Consolidated Balance Sheets. The accrual relates primarily to environmental remediation costs at a former paper mill in the United States and unpaid severance. The Company expects the majority of both the liability and the future costs associated with 2013 and Earlier Actions to be paid by the end of 2015 using cash generated from operations. |