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Restructuring
9 Months Ended
Oct. 02, 2015
Restructuring and Related Activities [Abstract]  
Restructuring
Restructuring
In July 2014, the Company announced a comprehensive restructuring program. The restructuring program, which builds on the Company's previously launched productivity and asset optimization plans, is focused on the closure of certain underperforming assets as well as the consolidation and realignment of other facilities. The Company is also implementing initiatives to reduce selling, general and administrative ("SG&A") expenses globally. During the first nine months of 2015, the Company continued with incremental restructuring actions including SG&A cost reductions and further asset optimization plans in North America and Europe. Costs incurred as part of the restructuring program related to the Company's Asia Pacific Operations are not included below as the costs associated with these exit or disposal activities are included within the results of discontinued operations. Total expected and aggregate restructuring costs related to the Asia Pacific Operations are $15.0 million and $14.8 million as of October 2, 2015, respectively. There are no restructuring costs related to the continuing operations of the Africa/Asia Pacific segment as of October 2, 2015.

As part of the restructuring program, in the second quarter of 2015, the Company completed the disposal of a subsidiary in Spain for cash consideration of $1.8 million. The pre-tax loss on the sale from the disposition in the second quarter was $11.6 million. This sale does not represent a strategic shift; therefore, the results are not presented as discontinued operations. This loss is included as asset-related restructuring costs in the Europe segment in the nine months ended October 2, 2015 and is recognized in the SG&A expenses caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company expects to incur approximately $210 million of pre-tax restructuring charges. The total expected costs are $25 million in the North America segment, $145 million in the Europe segment and $40 million in the Latin America segment. As of October 2, 2015, aggregate costs incurred are $16.7 million in the North America segment, $137.1 million in the Europe segment, and $35.6 million in the Latin America segment. For the three and nine months ended October 2, 2015, the Company incurred charges of $3.2 million and $38.3 million, respectively. For the three and nine months ended September 26, 2014, the Company incurred charges of $117.4 million and $130.8 million, respectively. For the three and nine months ended October 2, 2015, costs incurred were $2.3 million and $9.9 million in the North America segment, $0.0 million and $21.5 million in the Europe segment, and $0.9 million and $6.9 million in the Latin America segment, respectively. For the three and nine months ended September 26, 2014, costs incurred were $0.4 million and $3.6 million in the North America segment, $105.7 million and $105.7 million in the Europe segment, and $11.3 million and $21.5 million in the Latin America segment, respectively.

For the three and nine months ended October 2, 2015, approximately $2.3 million and $13.8 million of these charges were recorded in cost of sales and $0.9 million and $24.5 million of these charges were recorded as SG&A expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), respectively. For the three and nine months ended September 26, 2014, approximately $108.0 million and $121.4 million of these charges were recorded in cost of sales, respectively. For the three and nine months ended September 26, 2014, approximately $9.4 million of these charges were recorded as SG&A expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Restructuring costs incurred consist primarily of employee separation costs and asset-related costs to exit or realign facilities. The Company is also incurring other costs as outlined below.

Changes in the restructuring reserve and activity for the nine months ended October 2, 2015 are below (in millions):

 
Employee Separation Costs
Asset-Related Costs
Other Costs
Total
Total expected restructuring charges
$
65.0

$
120.0

$
25.0

$
210.0

Balance, December 31, 2014
$
32.4

$

$
1.0

$
33.4

Net provisions
11.9

14.8

11.6

38.3

Net benefits charged against the assets
(2.8
)
(14.8
)
(3.9
)
(21.5
)
Payments
(24.6
)

(6.1
)
(30.7
)
Foreign currency translation
(2.1
)

(0.1
)
(2.2
)
Balance, October 2, 2015
$
14.8

$

$
2.5

$
17.3

Total aggregate costs to date
$
50.2

$
119.0

$
20.2

$
189.4

Remaining expected restructuring charges
$
14.8

$
1.0

$
4.8

$
20.6


Employee Separation Costs
The Company recorded a benefit to employee separation costs of $0.3 million for the three months ended October 2, 2015 and costs of $11.9 million for the nine months ended October 2, 2015. In the three and nine months ended October 2, 2015, the Company recorded costs of $1.5 million and $7.9 million in North America, a benefit of $1.9 million for the three months ended October 2, 2015 and costs of $2.9 million for the nine months ended October 2, 2015 in Europe, and in the three and nine months ended October 2, 2015, costs of $0.1 million and $1.1 million in Latin America, respectively. The Company recorded employee separation costs of $28.6 million for the three and nine months ended September 26, 2014, consisting of $0.4 million in North America, $27.7 million in Europe, and $0.5 million in Latin America, respectively.
Employee separation costs include severance, retention bonuses and pension costs. As of October 2, 2015, employee separation costs included severance charges for approximately 1,170 employees; approximately 930 of these employees were classified as manufacturing employees and approximately 240 of these employees were classified as non-manufacturing employees. The charges relate to involuntary separations based on current salary levels and past service periods and are either considered one-time employee termination benefits in accordance with ASC 420 - Exit or Disposal Cost Obligations or charges for contractual termination benefits under ASC 712 - Compensation - Nonretirement Postemployment Benefits.
Asset-Related Costs
The Company recorded asset-related costs of $0.8 million and $14.8 million in the three and nine months ended October 2, 2015, respectively. The Company recorded long-lived asset impairment charges of $10.8 million in the nine months ended October 2, 2015 in Europe and $0.8 million and $4.0 million in Latin America for the three and nine months ended October 2, 2015, respectively. The Company recorded asset-related costs of $85.8 million and $95.9 million in the three and nine months ended September 26, 2014, respectively. The Company recorded long-lived asset impairment charges of $3.2 million in North America in the nine months ended September 26, 2014, $77.6 million in Europe, and $8.2 million and $15.1 million in Latin America for the three and nine months ended September 26, 2014, respectively.
Asset-related costs consist of asset write-downs, accelerated depreciation and the loss on the sale of a subsidiary in Spain as noted above. Asset write-downs relate to the establishment of a new fair value basis for assets to be classified as held-for-sale or to be disposed of, as well as asset impairment charges for asset groups to be held-and-used in locations which are being restructured and it has been determined the undiscounted cash flows expected to result from the use and eventual disposition of the assets are less than their carrying value. Management will continue to evaluate the recoverability of the carrying amount of its long-lived assets as the restructuring program is executed.
To determine the fair value, a current appraisal of each impaired asset groups' machinery and equipment and real property, as applicable, was performed utilizing standard valuation approaches, which incorporate Level 3 inputs. The Company assesses impairment at the asset group level which represents the lowest level for which identifiable cash flows can be determined independent of other groups of assets and liabilities. The asset groups at the Company are primarily each manufacturing unit, unless the cash flows of the manufacturing unit are not independent due to shared production, distribution and sale of the finished product. The Company considered the expected net cash flows to be generated by the use of each asset group, as well as the expected cash proceeds from the disposition of the assets, if any, to determine fair value. The impairment charges were recorded in the Cost of sales caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
The Company notes the plan to abandon a long-lived asset before the end of its previously estimated useful life is a change in accounting estimate per ASC 250 - Accounting Changes and Error Corrections. The annual depreciation impact from the asset write-downs and changes in estimated useful lives is immaterial.
Other Costs
The Company recorded other restructuring-type charges of $2.7 million and $11.6 million for the three and nine months ended October 2, 2015, respectively. The other restructuring-type charges were $0.8 million and $2.0 million in North America and $1.9 million and $7.8 million in Europe for the three and nine months ended October 2, 2015, respectively, and $1.8 million in Latin America for the nine months ended October 2, 2015, respectively.
The Company recorded other restructuring-type charges of $3.0 million and $6.3 million for the three and nine months ended September 26, 2014. The other restructuring-type charges were $0.4 million in Europe for the three and nine months ended September 26, 2014 and $2.6 million and $5.9 million in Latin America for the three and nine months ended September 26, 2014, respectively.
Other restructuring-type charges are incurred as a direct result of the restructuring program. Such charges primarily include working capital write-downs not associated with normal operations, equipment relocation, termination of contracts and other costs.