Restructuring and Other Related Costs
|9 Months Ended|
Sep. 30, 2017
|Restructuring and Related Activities [Abstract]|
|Restructuring and Other Related Costs||
Restructuring and Other Related Costs:
The following table presents the components of restructuring and other related costs for the three and nine months ended September 30, 2017 and 2016:
Legacy Eco Restructuring Plan
On July 30, 2014, Eco Services, a newly formed Delaware limited liability company and indirect subsidiary of certain investment funds affiliated with CCMP, entered into an Asset Purchase Agreement with Solvay USA, Inc. (“Solvay”), a Delaware corporation, which provided for the sale, transfer and assignment by Solvay and the acquisition, acceptance and assumption by Eco Services, of substantially all of the assets of Solvay’s Eco Services business unit of Solvay’s regeneration and virgin sulfuric acid production business operations in the United States (the “2014 Acquisition”). Prior to the Asset Purchase Agreement with Solvay, Eco Services operated as a business unit within Solvay, which is an indirect, wholly owned subsidiary of Solvay SA.
Subsequent to the 2014 Acquisition, the Company initiated a restructuring plan designed to improve organizational efficiency and streamline the operations of Eco Services as a stand-alone company. The primary impact of the plan to the Company’s consolidated results of operations was the recognition of severance costs related to a reduction-in-force. These costs included benefits payable under ongoing Company severance plan arrangements, whereby payments are attributable to employee services rendered with benefits that accumulate over time. The liabilities and associated charges related to these severance costs are recognized by the Company when payment of the benefits becomes probable and estimable. Charges related to severance costs for the restructuring plan were $830 and $4,496 for the nine months ended September 30, 2017 and 2016, respectively. No severance costs were incurred related to this plan for the three months ended September 31, 2017 and 2016.
Performance Materials Plant Closure
In September 2017, the Company approved and announced a plan to consolidate its manufacturing operations in Europe for the performance materials product group and close its facility in Kirchheimbolanden, Germany. The plan is part of the Company’s overall strategy with respect to the Sovitec acquisition (see Note 5 to these condensed consolidated financial statements) and the realization of cost and other synergies related to the business combination. The facility will remain in operation over the short term in a reduced capacity, and the Company plans to cease operations at the location on or about March 31, 2018. The Company plans to relocate the manufacturing equipment to other European facilities, and is exploring strategic alternatives for the building and land. As a result, the Company classified the plant under the “held and used” accounting model as of September 30, 2017, as it did not meet the criteria to be classified as “held for sale.”
As a result of the decision and announcement regarding the plant, the Company performed an impairment assessment related to the fixed assets of the facility. In conducting the recoverability assessment, the Company compared the carrying value of the asset group that includes the plant to the undiscounted future cash flows of the asset group, noting that there was no indication of impairment. The Company does not anticipate the acceleration of depreciation on the fixed assets associated with the plant, as the Company continues to utilize the assets and ultimately expects to relocate the equipment.
In addition to the fixed asset recoverability evaluation, the Company recorded a severance charge related to the pending closure and other cost reductions for its performance materials product group in Europe of $3,868 for the three months ended September 30, 2017. The charge was fully recognized as of September 30, 2017 based on the types of benefits provided and the criteria for restructuring and exit cost recognition.
Although the Company does not expect to incur additional severance costs related to the closure, the Company will incur additional costs related to the dismantling, transportation and reassembly of the manufacturing equipment after the plant ceases operations, which is currently estimated to be between $500 and $1,000.
Rollforward of Restructuring Liabilities
The activity in the accrued liability balance associated with the Company’s restructuring plans, all of which related to severance and other employee costs, was as follows for the nine months ended September 30, 2017:
The remaining accrued liability balance associated with the restructuring plans at September 30, 2017 is expected to be paid in 2018.
Other Related Costs
The Company incurred severance and other business optimization costs of $238 and $1,336 for the three months ended September 30, 2017 and 2016, respectively, and $880 and $6,402 for the nine months ended September 30, 2017 and 2016, respectively. These costs were not associated with formal restructuring plans and primarily related to severance charges for certain executives, transition/duplicate staffing, professional fees and other expenses related to the Company’s organizational changes.
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.
Reference 1: http://www.xbrl.org/2003/role/presentationRef