Divestitures

12 Months Ended

Dec. 31, 2019

15. Divestitures

In 2016, the Company’s Board of Directors authorized management to explore strategic alternatives for a facility and certain related business lines within the Flavors & Fragrances segment in Strasbourg, France. In 2016, the Company recorded a non-cash impairment charge of $10.8 million, in Selling and administrative expenses. In January 2017, the Company completed this divestiture for approximately $12.5 million. The Company recognized an additional non-cash loss of $11.6 million in 2017, in Selling and administrative expenses.

In October 2019, the Company announced its intent to divest its inks, fragrances (excluding its essential oils product line), and fruit preparation product lines. In October 2019, the Board of Directors approved the sale of the inks product line, which is within the Color segment. In November 2019, the Board of Directors approved the sale of the fragrances product line (excluding its essential oils product line), which is within the Flavors & Fragrances segment. As a result, the Company met all of the assets held for sale criteria for the inks and fragrances disposal groups. The divesting and exit of these products lines does not meet the criteria to be presented as a discontinued operation on the Consolidated Statements of Earnings.

As of December 31, 2019, the fruit preparation product line, which is included in the Flavors & Fragrances segment, does not yet meet all of the assets held for sale criteria. The Company continues to explore options to divest and exit this product line.

The assets and liabilities related to the inks and fragrances product lines are recorded in Assets held for sale and Liabilities held for sale as of December 31, 2019, as follows:

(in thousands)	2019
Assets held for sale:
Trade accounts receivable, less allowance for losses of $2,350	$	31,653
Inventories		34,612
Prepaid expenses and other current assets		5,528
Property, Plant, and Equipment, net		14,496
Intangible assets		5,004
Assets held for sale	$	91,293

Liabilities held for sale:
Trade accounts payable	$	12,318
Accrued salaries, wages and withholdings from employees		1,677
Other accrued expenses		5,190
Liabilities held for sale	$	19,185

As of December 31, 2019, an estimate of the fair value of the inks product line less cost to sell was determined to be lower than its carrying value resulting in a non-cash impairment charge of $15.8 million, recorded in Selling and administrative expenses. The charge reduced the carrying value of certain long-lived assets, primarily property, plant, and equipment and allocated goodwill, to their fair value. This estimate will be finalized and adjusted as necessary upon the closing of the sale or as estimates change. In addition, the Company currently estimates a non-cash gain of $6 million to $7 million upon closing the transaction related to the reclassification of accumulated foreign currency translation and related items from Accumulated other comprehensive loss to Selling and administrative expenses in the Consolidated Statement of Earnings. See Note 17, Subsequent Events, for additional information on events subsequent to December 31, 2019, that impact the estimated fair value of the inks product line.

As of December 31, 2019, an estimate of the fair value of the fragrances product line less cost to sell was determined to be lower than its carrying value resulting in a non-cash impairment charge of $18.2 million, in Selling and administrative expenses. The charge reduced the carrying value of certain long-lived assets, primarily property, plant and equipment and allocated goodwill, to their fair value. This estimate will be finalized and adjusted as necessary upon the closing of the sale or as estimates change, however, the Company currently estimates an additional non-cash charge of $11 million to $13 million upon closing related to the reclassification of accumulated foreign currency translation and related items from Accumulated other comprehensive loss to Selling and administrative expenses in the Consolidated Statement of Earnings.

Also in the fourth quarter of 2019, the Company recorded a non-cash charge of $9.8 million and disposal costs of $0.8 million, in Cost of products sold related to the fruit preparation divestiture. The non-cash charge reduced the carrying value of certain inventories, as they were determined to be excess based on changes in assumptions as of December 31, 2019.

In addition, the Company incurred $0.7 million of other divestiture and exit related costs, primarily severance, and a $0.6 million non-cash impairment charge related to other exit activities in the fourth quarter of 2019, which is recorded in Selling and administrative expenses.

The Company expects total cash costs associated with the anticipated divestitures to be between $7 million and $12 million, primarily related to severance and other exiting activities, and anticipates that it will complete the sales and exit activities of these product lines in 2020. The cash costs for the year ended December 31, 2019, were not significant.