| Restructuring/ Impairment Charges |
Note 16 – Restructuring/ Impairment Charges
In
the first half of 2012, we began several initiatives to streamline
our organization and rationalize our cost structure in order to
better position the Company for profitable growth in the
future. The goal of these initiatives is to become a
more streamlined organization both from an organizational and cost
perspective, with efficient manufacturing capabilities that is
focused on meeting our customer’s needs.
First Quarter 2012:
In
the first quarter of 2012, we announced
several initiatives as part of the streamlining plan. These
initiatives included the following:
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Implementing
an early retirement program for certain eligible
employees;
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Realigning
our organizational structure by consolidating a number of senior
executive positions, reorganizing certain business functions and
redeploying resources across the Company;
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Exiting
the Thermal Management Solutions business (previously announced in
the fourth quarter of 2011);
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Initiating
a plan to shut down the Power Distribution Systems startup
operation in North America, which is anticipated to be completed in
the third quarter of 2012; and
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Liquidating
our remaining auction rate securities.
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Second Quarter 2012:
In
the second quarter of 2012, we announced several additional
streamlining actions as follows:
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We
announced the shutdown of the High Performance Foams manufacturing
facility in Bremen, Germany, which is scheduled to be completed by
the end of 2012. The manufacture of certain silicone
foam materials produced in the Bremen facility will be consolidated
into our existing facility in Carol Stream,
Illinois. The expenses and charges related to the
termination of the operations at the Bremen facility are estimated
to be approximately $3.1 million and are comprised primarily of (i)
$0.9 million for the early termination of the lease on the
building; (ii) $0.8 million for severance charges for employees in
Bremen; (iii) $1.1 million impairment of certain assets;
and (iv) $0.3 million of costs to remove and transport certain
equipment to Carol Stream and prepare the building for return to
the landlord. We recognized approximately $1.5 million
of these charges in the second quarter of 2012, and expect to
recognize the remaining charges in the second half of
2012.
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We
made the decision to cease production of our non-woven composite
materials products in an effort to redeploy resources to focus on
our Core Strategic segments. Sales of these products
have been steadily declining for several years and totaled
approximately $1.4 million in the second quarter of 2012 and $4.8
million in fiscal 2011. The shutdown of production is
expected to occur by the end of 2012 and is not expected to have a
material impact on our overall operations. No material
charges are expected from this initiative.
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The
following table summarizes the restructuring and impairment charges
related to these activities recorded in our operating results in
the second quarter and first six months of 2012.
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(Dollars in thousands)
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Three Months Ended
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Six Months Ended
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Cost of Sales
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June 30, 2012
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June 30, 2012
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High Performance Foams
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Accelerated
depreciation expense related to Bremen shut-down
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$ |
585 |
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$ |
585 |
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Inventory
impairment related to Bremen shut-down
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191 |
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$ |
191 |
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Power Distribution Systems
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Accelerated
depreciation expense related to U.S. shut-down
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360 |
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360 |
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Total
charges for cost of sales
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$ |
1,136 |
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$ |
1,136 |
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Restructuring and Impairment
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High Performance Foams
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Fixed
asset impairment for Bisco and Poron asset disposal
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$ |
- |
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$ |
79 |
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Severance
and related costs (1)
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670 |
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$ |
3,088 |
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Power Distribution Systems
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Impairment
of investment related receivable
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264 |
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264 |
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Severance
and related costs (1)
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(13 |
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477 |
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Printed Circuit Materials
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Severance
and related costs (1)
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(276 |
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$ |
3,046 |
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Curamik Electronics Solutions
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Severance
and related costs (1)
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213 |
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957 |
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Other
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Severance
and related costs (1)
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(28 |
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303 |
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Total
charges for restructuring and impairment
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$ |
830 |
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$ |
8,214 |
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(1)
For the three and six month periods ended June 30, 2012, this line
item includes an estimated change of 2.3 million recorded in the
first quarter of 2012, offest by a favorable adjustment of $0.7
million recorded in the second quarter of 2012. Total net charge of
$1.6 million, for the first six months of 2012, was related to the
early retirement program implemented in the first quarter of
2012.
A
summary of the activity in the severance accrual as of June 30,
2012 and changes during the three month period then ended is as
follows:
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(Dollars in thousands)
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June 30, 2012
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Balance
at March 31, 2012
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$ |
4,545 |
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Provisions
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1,273 |
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Payments
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(1,911 |
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Balance
at June 30, 2012
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$ |
3,907 |
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