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Long-Lived Asset Impairment Charges
 12 Months Ended
Dec. 31, 2014
Restructuring and Related Activities [Abstract]  
Long-Lived Asset Impairment Charges
Long-Lived Asset Impairment Charges
Since we began idling plants in 2007, we have continuously evaluated our manufacturing needs by considering the capacity of existing and idled plants and production lines, as well as capital projects for manufacturing facilities, relative to the demand assumptions included in our long-range plan. Although industry and economic factors have improved and we believe that the overall economic recovery is intact, they are improving at a slower pace than expected, requiring us to reconsider the future utilization of idled plants and production lines, and capital projects for manufacturing facilities. As a result, we have recorded the following impairment charges.
(millions)
2014
 
2013
 
2012
Ocean vessels
$
60

 
$
—

 
$
—

Wallboard lines or facilities
16

 
—

 
—

Previously incurred costs related to construction of future facilities
12

 
—

 
—

Permanently closed gypsum quarry and ship loading facility
—

 
—

 
7

Other
2

 
—

 
1

Total long-lived asset impairment charges
$
90

 
$
—

 
$
8


2014
In 2014, we recorded long-lived asset impairment charges totaling $90 million, which included the following:
(a) impairment charges of $16 million related to the carrying values of machinery, equipment and buildings at our temporarily idled gypsum quarry and wallboard production facility in Empire, Nevada and at our previously idled and now permanently closed gypsum wallboard line in New Orleans, Louisiana. In addition, in the third quarter of 2014 we permanently closed our wallboard line in Detroit, Michigan. No impairment charge was recorded with respect to our wallboard line in Detroit, Michigan, as these assets were previously impaired at the time the plant was originally idled.
(b) impairment charges of $12 million related to previously incurred and capitalized costs for the construction of two future facilities which we do not anticipate will be built within our planning horizon.
(c) impairment charges of $2 million related to the carrying values of machinery, equipment and buildings at our previously idled and now permanently closed paper production line in Gypsum, Ohio.
(d) impairment charges of $60 million related to our two self-unloading ocean vessels. See Note 14 for further discussion.
The carrying values of the machinery, equipment and buildings at our temporarily idled facility in Empire, Nevada exceeded the estimated future undiscounted cash flows for the remaining useful lives of the assets due to slower than expected acceleration in the markets served by this facility and our forecasts regarding the timing and future rate of recovery in those markets. Based on these conditions, we do not anticipate that the carrying values of the assets at this facility would be recovered prior to end of the assets’ useful lives, and therefore fully impaired these assets. For the production line in Gypsum, Ohio that we deemed to be permanently closed, we fully impaired the long-lived assets specific to that line.
The long-lived asset impairment charges relate solely to our Gypsum segment.
2012
In 2012, we recorded long-lived asset impairment charges of $8 million. These impairment charges were primarily due to a change in estimate related to reclamation activities at our Windsor, Nova Scotia, Canada facility, which resulted in an increase in the related asset retirement obligation by $7 million with a corresponding increase to the long-lived assets at this facility. Consequently, we recorded a long-lived asset impairment charge of $7 million to write the assets down to their fair value of $6 million. We also recorded a $1 million impairment on machinery and equipment for a previously idled production line. Of these long-lived asset impairment charges, $7 million relate to our Gypsum segment and $1 million relate to our Ceilings segment.
Gypsum Transportation Limited
Gypsum Transportation Limited, or GTL, our wholly owned subsidiary, owns two self-unloading ocean vessels. GTL was a party to a five-year contract of affreightment to transship iron ore in and around Sierra Leone since 2011. During the fourth quarter, our trading partner ceased operations, and consequently, we terminated the agreement. As a result of the contract termination, we assessed the recoverability of the carrying value of the vessels and recorded an impairment charge of $60 million. See Note 9 for additional information related to the fair value measurement.
In addition to our two owned vessels, GTL leased a third vessel for the use in the same transhipment agreement. We recorded a contract termination charge of $6 million, initially measured at fair value at the cease-use date, for costs that will continue to be incurred under this lease for the remaining term without economic benefit to us. The actual amount of cash payments made for lease contract termination costs will be dependent upon our ongoing negotiations with the lessor and will be paid in 2015.
The trade receivable owed from our trading partner was $9 million as of December 31, 2014. We have deemed this balance to be uncollectible and recorded a $9 million provision for bad debt.
Each of these charges relating to our GTL operations was recorded within our Gypsum segment. The impairment charge for the two owned vessels is recorded within long-lived asset impairment charges on our consolidated statement of operations. The contract termination charge and provision for bad debt are recorded within contract termination charge and loss on receivable on our consolidated statement of operations.
In February 2015, as consideration for DVB Bank SE’s consent to allow GTL to enter into certain future contracts of affreightment, GTL voluntarily repaid $2 million of the outstanding loan balance under its secured loan facility. The repayment provisions of the secured loan facility have not otherwise been modified from the terms as described in Note 7 to these consolidated financial statements. The voluntary repayment was not classified in the current portion of long-term debt on our consolidated balance sheets as of December 31, 2014.
Restructuring Charges
As part of our continuing efforts to adapt our operations to market conditions, we implemented restructuring activities in 2013 and 2012 that resulted in the following restructuring charges:
(millions)
2014
 
2013
 
2012
Severance
—

 
2

 
6

Lease obligations
—

 
(1
)
 
—

Other exit costs
—

 
2

 
4

Total
$
—

 
$
3

 
$
10


2013
Total restructuring charges of $3 million primarily consisted of severance related to various cost-reduction programs, including our December 2012 management workforce reduction and salaried workforce reductions across various functional areas resulting from our initiatives to centralize and consolidate certain back-office operations as well as other exit costs.
2012
Total restructuring charges of $10 million primarily related to salaried workforce reductions. As a result of these actions, the number of salaried employees terminated and open salaried positions eliminated was approximately 90 and the number of hourly employees terminated and open hourly positions eliminated was approximately 40.
Restructuring Reserve
A restructuring reserve of $8 million was included in accrued expenses and other liabilities on the consolidated balance sheet as of December 31, 2014. We expect future payments to be approximately $1 million in 2015, $1 million in 2016 and $6 million after 2016. On a segment basis, $1 million of all expected future payments relate to Gypsum, $6 million to Distribution and $1 million to Corporate. All restructuring-related payments were funded with cash on hand. We expect that the future payments will be funded with cash from operations or cash on hand.
The restructuring reserve for the years ended December 31, 2014, 2013 and 2012 is summarized as follows:
 
Balance
as of
January 1
 
Annual Activity
 
Balance
as of
December 31
(millions)
 
Charges
 
Cash
Payments
 
2014 Activity:
 
 
 
 
 
 
 
Severance
$
1

 
$
—

 
$
—

 
$
1

Lease obligations
10

 
—

 
(3
)
 
7

Other exit costs
—

 
—

 
—

 
—

Total
$
11

 
$
—

 
$
(3
)
 
$
8

2013 Activity:
 
 
 
 
 
 
 
Severance
$
5

 
$
2

 
$
(6
)
 
$
1

Lease obligations
15

 
(1
)
 
(4
)
 
10

Other exit costs
—

 
2

 
(2
)
 
—

Total
$
20

 
$
3

 
$
(12
)
 
$
11

2012 Activity:
 
 
 
 
 
 
 
Severance
$
4

 
$
6

 
$
(5
)
 
$
5

Lease obligations
21

 
—

 
(6
)
 
15

Other exit costs
9

 
4

 
(13
)
 
—

Total
$
34

 
$
10

 
$
(24
)
 
$
20