As discussed in the chapter, the following restructuring events were reported by McCormick:

a. In October 1994, the company announced plans to lay off 7 percent of its 8,600-

person staff, close two spice plants, and sell off a money-losing onion-ring operation.

A $70.5 million restructuring liability was created for the costs of the restructuring.

b. In February 1995, the company reduced the amount of the charge by $3.9 million, which it added to earnings in the first quarter of 1995.

c. In 1996 McCormick announced a second restructuring. Most of the costs of the restructuring ($58.1 million) were recognized immediately as a restructuring liability.

However, the firm noted that some charges related to costs of moving equipment and personnel from a closed U.S. packaging plant could not be accrued.
These charges (for $1.9 million) were eventually recognized in the fourth quarter of 1998.

d. In the third quarter of 1997, McCormick reevaluated its restructuring plans and recorded a restructuring credit of $9.5 million because plans to sell an overseas food brokerage and distribution business were not completed.

e. The 1996 restructuring was concluded in the fourth quarter of 1998 and a further restructuring credit of $3.1 million was reported.
What are the financial statement effects of these events? As a corporate manager, what forecasts do you have to make to record these events? As a financial analyst, what questions would you raise with the firm’s CFO about the restructuring events?AppendixLO1