11.	Restructuring

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 more detail in Note 12, Discontinued Operations.

In March of 2014, the Company announced that it was initiating 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. The Company also discontinued one of the businesses in the Color Group because it did not fit with the Company’s long term strategic plan and it had generated losses for several years. 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 for these assets. The fair values of the remaining long-lived assets are estimated to be approximately $22.0 million. Also, certain machinery and equipment has been identified to be disposed of at the time of the facility closures and the associated depreciation for these assets has been accelerated. In addition, certain intangible assets and inventory 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 will reduce headcount by approximately 377 positions at impacted facilities, primarily in the Flavors & Fragrances Group, related to direct and indirect labor at manufacturing sites. As of June 30, 2015, approximately 180 positions have been eliminated as a result of this Plan. For the three and six months ended June 30, 2015, the Company recorded total restructuring costs of $9.7 million and $16.9 million, respectively, in accordance with GAAP and based on an internal review of the affected facilities and consultation with legal and other advisors. Since initiating the 2014 Restructuring Plan, the Company has incurred $115.4 million of restructuring costs through June 30, 2015. During the current quarter, the Company identified an additional opportunity to consolidate certain manufacturing operations at one of the Color Group’s facilities in Europe. Including the costs related to this facility, the Company expects to incur approximately $16 million of additional restructuring costs by the end of 2015 and approximately $9 million of additional restructuring costs by the end of 2016. For the three and six months ended June 30, 2014, the Company recorded restructuring and other costs of $13.0 million and $65.7 million, respectively. Included within the restructuring and other costs, the Company incurred $2.2 million and $3.1 million, respectively, related to the 2014 proxy contest during the three and six months ended June 30, 2014.

The closure of these operations will significantly lower the Company’s operating costs, which will be realized over the next few years. The full benefit of the restructuring will be achieved after 2016. For the three and six months ended June 30, 2015, the Company achieved approximately $1.6 million and $3.1 million of savings in continuing operations, respectively, related to the 2014 Restructuring Plan. Upon implementing the Plan, the Company estimated the cost reductions to be approximately $30 million, but the actual cost reductions could vary based upon changes in exchange rates and other assumptions. The Company achieved cost savings of approximately $3 million in 2014. Based on current exchange rates, the annual cost savings are estimated to be approximately $7 million in 2015, for total cost savings of $9 to $10 million through the end of 2015. Furthermore, the Company expects to realize incremental savings of approximately $6 million in 2016 and an additional $8 to $9 million in 2017. In cases where the estimated cost savings have been reduced because of changes in foreign currency exchange rates, the Company has implemented price increases to reduce the impact of foreign currency movements.

The Company evaluates performance based on operating income of each segment before restructuring costs. The restructuring and other costs related to continuing operations are recorded in the Corporate & Other segment. The following table summarizes the restructuring and other costs by segment and discontinued operations for the three and six months ended June 30, 2015 and 2014:

	Three Months Ended June 30,
(In thousands)	2015		2014
Flavors & Fragrances	$	7,191	$	9,068
Color		1,422		-
Corporate & Other		1,009		2,500

Total Continuing Operations		9,622		11,568

Discontinued Operations		85		1,411

Total Restructuring	$	9,707	$	12,979

	Six Months Ended June 30,
(In thousands)	2015		2014
Flavors & Fragrances	$	13,020	$	54,051
Color		1,583		-
Corporate & Other		2,134		3,704

Total Continuing Operations		16,737		57,755

Discontinued Operations		114		7,946

Total Restructuring	$	16,851	$	65,701

The Company recorded restructuring costs in continuing operations for the three and six months ended June 30, 2015, as follows:

Three Months Ended June 30, 2015

(In thousands)	Selling & Administrative		Cost of Products Sold		Total

Employee separation	$	1,796	$	-	$	1,796
Long-lived asset impairment		3,665		-		3,665
Write-down of inventory		-		140		140
Other costs⁽¹⁾		4,021		-		4,021

Total	$	9,482	$	140	$	9,622

Six Months Ended June 30, 2015

(In thousands)	Selling & Administrative			Cost of Products Sold		Total

Employee separation	$	3,704		$	-	$	3,704
Long-lived asset impairment		7,480			-		7,480
Gain on asset sales		(1,301	)		-		(1,301	)
Write-down of inventory		-			281		281
Other costs⁽¹⁾		6,573			-		6,573

Total	$	16,456		$	281	$	16,737

⁽¹⁾

Other costs include decommissioning costs, professional services, temporary labor, moving costs and other related costs.

The Company recorded restructuring and other costs in continuing operations for the three and six months ended June 30, 2014, as follows:

Three Months Ended June 30, 2014

(In thousands)	Selling & Administrative		Cost of Products Sold		Total

Employee separation	$	1,024	$	-	$	1,024
Long-lived asset impairment		8,033		-		8,033
Other costs⁽¹⁾		2,511		-		2,511

Total	$	11,568	$	-	$	11,568

Six Months Ended June 30, 2014

(In thousands)	Selling & Administrative			Cost of Products Sold		Total

Employee separation	$	12,291		$	-	$	12,291
Long-lived asset impairment		42,263			-		42,263
Gain on asset sales		(602	)		-		(602	)
Other costs⁽¹⁾		3,803			-		3,803

Total	$	57,755		$	-	$	57,755

⁽¹⁾

Other costs include decommissioning, professional services, personnel moving costs, other related costs and 2014 proxy contest costs.

The following table summarizes the accrual activity for the restructuring liabilities for the six months ended June 30, 2015:

(In thousands)	Employee Separations			Other Costs			Total
Balance as of December 31, 2014	$	14,909		$	897		$	15,806
Expense activity		3,313			7,130			10,443
Cash spent		(4,977	)		(7,344	)		(12,321	)
Translation adjustment		(967	)		-			(967	)
Balance as of June 30, 2015	$	12,278		$	683		$	12,961