Asset Impairment Charges and Facility Closing and Reorganization Costs (Tables)

12 Months Ended

Dec. 31, 2013

Approved plans within our multi-year initiatives and related charges are summarized as follows:


	Year Ended December 31
	2013		2012			2011
	(In thousands)
Closure of facilities(1)	$	20,845	$	18,536		$	18,751
Organization Optimization Initiative(2)		5		(872	)		24,878
Department Realignment(3)		—		(96	)		2,535
Functional Realignment(4)		892		32,219			—
Field and Functional Reorganization(5)		5,266		6,000			—
Other		—		—			(476	)

Total	$	27,008	$	55,787		$	45,688

(1)

These charges in 2013, 2012 and 2011 primarily relate to facility closures in Denver, Colorado; Waco, Texas; Springfield, Virginia; Buena Park, California; Shreveport, Louisiana; Evart, Michigan; Bangor, Maine; and Mendon, Massachusetts, as well as other approved closures. We have incurred $38.2 million of charges to date related to our active restructuring initiatives. We expect to incur additional charges related to these facility closures of $4.2 million, related to contract termination, shutdown and other costs. As we continue the evaluation of our supply chain it is likely that we will close additional facilities in the future.

(2)

In the first quarter of 2011 we initiated a significant cost reduction program that was incremental to our other ongoing cost-savings initiatives. This initiative is focused on permanently removing costs out of our business through organizational and corporate departmental redesigns, driven by process simplification and standardization, centralization of activities and reorganization to drive growth in our core customers and categories. As part of this program, we eliminated approximately 300 corporate and field positions during 2011. The charges recorded during 2011 relate to workforce reduction costs and include costs associated with eliminating the position filled by our then President and Chief Operating Officer. We incurred $24.0 million of charges related to this initiative to date, and we do not expect to incur any material additional charges under this program going forward.

(3)

Charges relate to workforce reduction costs associated with a multi-year cost reduction plan aimed at centralization and process improvement, as well as business unit and functional organization redesigns. The plan was implemented during the fourth quarter of 2010 and resulted in the elimination of approximately 75 positions as each function reorganized its processes in line with peer comparisons and internally developed functional blueprints as approved by an executive operating team. We incurred total charges of $5.4 million related to this initiative and do not expect to incur any additional charges in the future.

(4)

During the first quarter of 2012, our management team reassessed our company-wide strategy, resulting in a shift in focus to deploying our capital and strategically investing in the value-added segments of our business. With this new strategy, our goal was to invest our strategic capital primarily in those initiatives that yield higher returns over shorter time frames. In connection with this change, our management team approved a cost reduction plan that was incremental to any other prior cost savings initiative. This initiative was focused on aligning key functions within our legacy Fresh Dairy Direct operations under a single leadership team and permanently removing costs from the organization and certain functions that supported this segment of our business. During the first half of 2012, we eliminated approximately 120 positions at our corporate headquarters that directly supported the former Fresh Dairy Direct business. Charges recorded during 2013 and 2012 are related to workforce reduction costs, the write-down of certain information technology assets and leasehold improvements, lease termination costs and costs associated with exiting other commitments deemed not necessary to execute our new strategy. We have incurred total charges of approximately $33.1 million under this initiative to date and we do not expect to incur any material future charges related to this plan.

(5)

During the fourth quarter of 2012, our executive management team approved a plan to reorganize our field organization and certain functional areas that support our regional business teams, including finance, distribution, operations and human resources. We believe this streamlined leadership structure has enabled faster decision-making and created enhanced opportunities to strategically build our business. We have incurred total charges of $11.3 million under this plan to date, all of which are associated with headcount reductions. We do not currently anticipate incurring any material charges under this plan going forward.

Facility Closing and Reorganization Costs

Activity for 2013 and 2012 with respect to facility closing and reorganization costs is summarized below and includes items expensed as incurred:


	Accrued Charges at December 31, 2011			Charges			Payments			Accrued Charges at December 31, 2012		Charges			Payments			Accrued Charges at December 31, 2013
	(In thousands)
Cash charges:
Workforce reduction costs	$	5,185		$	26,260		$	(19,866	)	$	11,579	$	11,872		$	(14,423	)	$	9,028
Shutdown costs		(41	)		1,579			(1,538	)		—		6,051			(6,051	)		—
Lease obligations after shutdown		—			2,798			(812	)		1,986		7,822			(1,447	)		8,361
Other		3			2,158			(1,934	)		227		1,404			(1,631	)		—

Subtotal	$	5,147			32,795		$	(24,150	)	$	13,792		27,149		$	(23,552	)	$	17,389

Non-cash charges:
Write-down of assets(1)					23,411								3,270
(Gain)/Loss on sale of related assets					(580	)							(3,858	)
Other					161								447

Total charges				$	55,787							$	27,008

(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.