21. Business Restructuring and Asset Impairments

2014 Restructuring

In the fourth quarter of 2014, a restructuring plan was approved that affects certain Company functions, principally the R&D function and to a lesser extent product safety and compliance and plant site accounting functions (primarily affecting the Surfactants segment). The objective of the plan is to better align staffing resources with the needs of the Company’s diversification and growth initiatives. In implementing the plan, management offered a voluntary retirement incentive to employees of the affected functions. By December 31, 2014, 13 employees accepted the voluntary termination incentive. As a result, the Company recognized a $1,722,000 charge against income for the three and twelve months ended December 31, 2014. The incentive pay is expected to be disbursed in the first quarter of 2015. Although the Company may realize some short-term cost savings from the action, the restructuring is not considered a cost savings initiative but rather an opportunity to create some staffing availability to reposition roles to meet changing business needs. Other costs for the restructuring are not expected to be material.

2014 Asset Impairments

In the fourth quarter of 2014, the Company wrote off the net book values of three assets, resulting in a charge against income of $2,287,000 for the three and twelve months ended December 31, 2014. All three assets were part of the Company’s Surfactants segment, although the write-off charges were excluded from Surfactants segment results. At the Company’s Singapore location (Asia Surfactants operations), $1,316,000 of engineering costs for an asset expansion project were reversed out of the Company’s construction-in-process account and into expense because management determined that, given the current business environment, the magnitude of the project could no longer be economically justified. At the Company’s Millsdale, Illinois, plant (North American Surfactants operations), a reactor used to manufacture certain surfactant products was no longer required and was retired and removed from service. The book value of the asset was $714,000. The remaining $257,000 of impairment charges related to an administrative building at the Company’s United Kingdom site (European Surfactants operations) that was vacated and essentially abandoned in place in the fourth quarter of 2014.

2013 Restructuring

In the fourth quarter of 2013, the Company recorded a $1,040,000 restructuring charge for estimated severance expense related to an approved plan to reduce future costs and increase operating efficiencies by consolidating a portion of its North American Surfactants manufacturing operations (part of the Surfactants reportable segment). In the third quarter of 2014, the Company shut down certain production areas at its Canadian manufacturing site. Production in those areas was moved to other U.S. plants. This consolidation resulted in the elimination of 16 North American positions. Most of the remaining severance payments are expected to be made in the first quarter of 2015. Other restructuring costs for this plan were not material. Following is a reconciliation of the beginning and ending balances of the restructuring liability:

(In thousands)	Severance Expense
Restructuring liability at December 31, 2013	$	1,040
Amounts paid		(420	)
Foreign currency translation		(57	)
Restructuring liability at December 31, 2014	$	563

In connection with the planned business restructuring, the Company reduced the useful lives of the manufacturing assets in the affected areas of the Canadian plant. The change in useful lives resulted in accelerated depreciation expenses of $296,000 in 2013 and $1,825,000 in 2014. The depreciation expense was included in the cost of sales line of the consolidated statement of income.