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Restructuring and Asset Impairment Charges

6 Months Ended

Jun. 30, 2012

Restructuring and Asset Impairment Charges

Restructuring and Asset Impairment Charges

3. Restructuring and Asset Impairment Charges

In the second quarter of 2012, the Company decided to restructure its business operations in Kenya and close its manufacturing plant in the country. As part of that decision, the Company recorded a $10 million restructuring charge to its Statement of Income consisting of a $6 million fixed asset impairment charge, a $2 million charge to reduce certain working capital balances to fair value based on the announced closure, and $2 million of costs primarily consisting of severance pay related to the termination of the majority of its employees in Kenya. The Company estimates that it will incur approximately $12 million in additional charges in the second half of 2012 associated with this restructuring. These anticipated charges include the recognition of the cumulative translation adjustment associated with its Kenyan operations of approximately $7 million and other period costs to wind down the operations, such as dismantling the factory. The Company anticipates completing this disposal activity by the end of 2012.

Additionally, as part of a manufacturing optimization program developed in conjunction with the acquisition of National Starch to improve profitability, in the second quarter of 2011 the Company committed to a plan that will optimize its production capabilities at certain of its North American facilities. The Company anticipates that its plan will be completed in the second half of 2012 at which time certain equipment will cease to be used. As a result, the Company is recording restructuring charges to write the equipment off by September 30, 2012. For the second quarter and first-half of 2012, the Company recorded charges of $4 million and $7 million, respectively, of which $3 million and $6 million represent accelerated depreciation on the equipment. The Company anticipates recording further restructuring charges of approximately $4 million in the second half of 2012 until the completion of the plan when the equipment will be fully depreciated.

For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. For long-lived assets to be held and used by an entity, disclosures may include a description of the impaired long-lived asset and facts and circumstances leading to the impairment, amount of the impairment loss and where the loss is located in the income statement, method(s) for determining fair value, and the segment in which the impaired long-lived asset is reported. Description of restructuring activities including exit and disposal activities, which should 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. This description does not include restructuring costs in connection with a business combination or discontinued operations and long-lived assets (disposal groups) sold or classified as held for sale. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables.

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