|
redemption of our Signature investment in 2006 and other
joint ventures in 2006 and 2007. Of the expected position
reduction of approximately 1,200, 1,015 have been eliminated
as of November 2007.
Joint Venture Transactions – Previously, we participated
in two separate joint ventures with the same joint
venture partner, Hero A.G. We owned 50% of Signature
and 51% of Dessert Products International, S.A.S. (DPI).
Signature is a cake decorating business in the U.S. and
DPI markets the Vahine® brand of dessert aids in France
and other European countries.
In 2006, we received the remaining 49% share of DPI in
redemption of our 50% ownership investment in
Signature. In addition, we received $9.2 million in cash
with this transaction.
In recording this transaction, we valued both the investment
received and the investment given at their fair value.
On the disposition of our Signature investment, the fair
value of our investment was $56.0 million as compared to
our book value of this unconsolidated subsidiary of $21.7
million. After consideration of transaction costs of $0.6
million and taxes of $7.2 million, we recorded a net after-tax
gain of $26.5 million which is shown on the line
entitled “(Loss) gain on sale of unconsolidated operations”
in our income statement. On the acquisition of the
49% minority interest of DPI, the fair value of these
shares was assessed at $46.9 million. Since this business
was consolidated, the book value of this 49% share was
shown as $29.9 million of minority interest on our balance
sheet. After consideration of transaction costs of $0.7
million, we allocated $17.7 million to goodwill. The impact
of increasing our share in DPI and disposing of Signature
on future net income is not material.
In 2006, in connection with exiting an unconsolidated
joint venture in Japan, we recorded a net gain of $0.3
million, after-tax. Finalization of these unconsolidated joint
venture transactions resulted in a loss of $0.8 million,
after-tax, in 2007.
These actions are part of our plan to simplify our joint
venture structure under the restructuring program and
focus on those areas we believe have strong growth
potential.
Other Restructuring Costs – In 2007, we recorded
restructuring charges of $34.0 million ($23.6 million after-tax),
of which $30.7 million is reflected in restructuring
charges and $3.3 million is reflected in cost of goods sold
in our income statement. We recorded $14.9 million of severance costs, primarily associated
|
|
with the reduction
of administrative personnel in the U.S. and Europe. In
addition, we recorded $16.7 million of other exit costs
resulting from the closure of manufacturing facilities in
Salinas, California and Hunt Valley, Maryland and the
consolidation of production facilities in Europe. The
remaining $2.4 million of asset write-downs is comprised
of inventory write-offs as a result of the closure of the
manufacturing facilities in Salinas, California and Hunt
Valley, Maryland and accelerated depreciation of assets,
mostly offset by the asset gain from the sale of our manufacturing
facility in Paisley, Scotland.
In 2006, we recorded restructuring charges, exclusive
of the gain on Signature, of $84.1 million ($57.1 million
after-tax), of which $72.4 million is reflected in restructuring
charges and $11.7 million is reflected in cost of goods
sold in our income statement. We recorded $54.9 million
of severance costs and special early retirement benefits
associated with our voluntary separation program in
several functions in the U.S.; closures of manufacturing
facilities in Salinas, California; Hunt Valley, Maryland;
Sydney, Australia; Paisley, Scotland; and Kerava, Finland;
and reorganization of administrative functions in Europe.
In addition, we recorded $15.7 million of other exit costs
associated with the consolidation of production facilities
and the reorganization of the sales and distribution
networks in the U.S. and Europe and contract termination
costs associated with customers and distributors in
connection with the closure of the business in Finland.
The $13.5 million of restructuring charges for asset write-downs
is primarily accelerated depreciation related to the
closure of manufacturing facilities in Salinas, California and
Hunt Valley, Maryland, the closure of the plants in Paisley,
Scotland and Kerava, Finland and inventory write-offs as a
result of the plant closings. These expenses were partially
offset by net gains on the disposition of assets.
In 2005, we recorded $10.7 million ($7.2 million after-tax)
of charges as a result of actions taken under the
restructuring plan. These charges included certain severance
costs associated with the closing of our consumer
manufacturing plant in Salinas, California, closing costs for
a small plant in Belgium and costs associated with the
reorganization of the sales and distribution networks in the
U.S. and Europe.
|
|