Asset Impairment Charges and Facility Closing and Reorganization Costs

Asset Impairment Charges

We evaluate our long-lived assets for impairment when circumstances indicate that the carrying value may not be recoverable. Indicators of impairment could include, among other factors, significant changes in the business environment or the planned closure of a facility. Considerable management judgment is necessary to evaluate the impact of operating changes and to estimate future cash flows. As a result of certain changes to our business and plans for consolidating our production network, we evaluated the impact that we expect these changes to have on our projected future cash flows as of September 30, 2015.

Testing the assets for recoverability involved developing estimates of future cash flows directly associated with, and that are expected to arise as a direct result of, the use and eventual disposition of the assets. Other inputs were based on assessment of an individual asset’s alternative use within other production facilities, evaluation of recent market data and historical liquidation sales values for similar assets. As the inputs for testing for recoverability are largely based on management’s judgments and are not generally observable in active markets, we consider such measurements to be Level 3 measurements in the fair value hierarchy. See Note 6.

The results of our analysis indicated no impairment of our plant, property and equipment, outside of facility closing and reorganization costs, for the three and nine months ended September 30, 2015. During the three and nine months ended September 30, 2014, we recorded an impairment of our plant, property and equipment of $7.4 million. We can provide no assurance that we will not have impairment charges in future periods as a result of changes in our business environment, operating results or the assumptions and estimates utilized in our impairment tests.

Facility Closing and Reorganization Costs

Approved plans within our multi-year initiatives and ongoing network optimization strategies are summarized as follows:



	Three Months Ended September 30				Nine Months Ended September 30
	2015		2014		2015		2014
	(In thousands)
Closure of facilities(1)	$	2,709	$	2,805	$	9,362	$	4,510
Total	$	2,709	$	2,805	$	9,362	$	4,510

(1)

These charges in 2015 and 2014 primarily relate to facility closures in Rochester, Indiana; Sheboygan, Wisconsin; Riverside, California; Delta, Colorado; Denver, Colorado; Dallas, Texas; Waco, Texas; Springfield, Virginia; Buena Park, California; Evart, Michigan; Bangor, Maine; Shreveport, Louisiana and Mendon, Massachusetts, as well as other approved closures. We have incurred $54.6 million of charges related to these initiatives through September 30, 2015. We expect to incur additional charges related to these facility closures of approximately $4.0 million related to contract termination, shutdown and other costs. As we continue the evaluation of our supply chain and distribution network, it is likely that we will close additional facilities in the future.

Activity with respect to facility closing and reorganization costs during the nine months ended September 30, 2015 is summarized below and includes items expensed as incurred:



	Accrued Charges at December 31, 2014		Charges and Adjustments		Payments			Accrued Charges at September 30, 2015
	(In thousands)
Cash charges:
Workforce reduction costs	$	1,283	$	3,485	$	(2,189	)	$	2,579
Shutdown costs	—		1,952		(1,952		)	—
Lease obligations after shutdown	6,855		384		(1,338		)	5,901
Other	—		365		(365		)	—
Subtotal	$	8,138	6,186		$	(5,844	)	$	8,480
Noncash charges:
Write-down of assets (1)			2,758
Gain on sale of related assets			235
Other, net			183
Total charges			$	9,362

(1)

The write-down of assets relates primarily to owned buildings, land and equipment of those facilities identified for closure. The assets were tested for recoverability at the time the decision to close the facilities was more likely than not to occur. Our methodology for testing the recoverability of the assets is consistent with the methodology described in the "Asset Impairment Charges" section above.