Notes to Financial Statements
NOTE 19—Restructuring and Other Charges
In the third quarter of 2000, the Company recorded a $2.0 million
restructuring credit, which consisted of a $0.7 million reversal
of the restructuring charge recorded in 1999 due to revised
estimates of severance and related obligations and a $1.3 million
reversal of restructuring charges recorded in years prior to
1999 due to revised estimates.
In the fourth quarter of 1999, the Company recorded a $1.5 million
net restructuring credit, which consisted of a $2.1 million
restructuring charge related to its long-term restructuring
plan and a $3.6 million reversal of prior period restructuring
charges due to revised estimates. The 1999 restructuring charge
reflected consolidation and downsizing of the Company’s
German operations, which are included in the international distribution
segment. The charge resulted from a plan that was adopted in
December 1999. The charge related to severance and related costs
for the termination of approximately 22 warehouse, customer
service, and sales employees. As of December 31, 2000, the Company
had expended $1.0 million and reversed $0.7 million of the $2.1
million accrual. The plan was substantially complete at December
31, 2000 and the remaining accrual of $0.4 million is expected
to be expended in 2001. The $3.6 million reversal of prior period
restructuring charges was comprised of a $3.0 million reduction
of severance due to organizational changes and voluntary separations
that occurred during 1999 which were not anticipated in prior
periods and a $0.6 million reduction due to revised estimates
for the closing of logistics centers in the United States.
In the fourth quarter of 1998, the Company recorded $23.6 million
of restructuring and other charges which included $26.5 million
of charges related to its long-term restructuring plan and $2.9
million of reversals for adjustments to prior period restructuring
charges due to revised estimates. In 1998, restructuring and
other charges included international asset impairment charges
attributable to the economic slow-down in the Far East, write-offs
of information systems due to a change in management’s
global information system strategy, and employee separation
and other exit costs due to a restructuring in the U.S. and
Europe of the Company’s management team and selected components
of its sales force. These charges consisted of $13.6 million
related to noncash asset impairments, $12.0 million of accruals
for employee separation arrangements and $0.9 million of exit
costs.
Asset impairment charges in 1998 included $0.9 million of goodwill
and other intangibles and $12.7 million of property, plant and
equipment. The property, plant and equipment impairment charge
included $4.7 million related to land in the Far East which
the Company no longer planned to develop and warehouses in the
same region that were impaired due to reduced volume and projected
operating losses. The impairment amounts were based on independent
appraisals. The remainder of the property, plant and equipment
impairment charge is primarily attributable to global information
system software that the Company no longer used due to a change
in system strategy. The charge for employee separation arrangements
related to the termination and other severance costs associated
with approximately 139 salaried and hourly employees, essentially
all of whom were terminated as of December 31, 1999. The other
exit costs primarily related to the European restructuring.
The 1998 restructuring plan was substantially completed during
1999. At December 31, 2000, the Company had $1.1 million of
long-term severance accruals remaining which are expected to
be expended during 2001. The Company expended $2.7 million in
cash and reversed $0.2 million of accruals during 2000.
At December 31, 1999, the Company also had $3.9 million of accruals
remaining from restructuring charges recorded in years prior
to 1998. During the year ended December 31, 2000, the Company
expended $1.7 million and reversed an additional $1.1 million
of these accruals based upon revised estimates. The remaining
accrual of $1.1 million relates primarily to long-term lease
and severance obligations and is expected to be expended during
2001.
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