restructuring charge

(redirected from Restructuring Charges)

Restructuring Charge

A cost that a company incurs when it reorganizes its operations. Restructuring charges include costs with opening or closing a factory, hiring new employees or paying the severances for lay-offs, and so forth. Restructuring charges are included in the calculation of a company's net income, but because they are unusual, a high restructuring charge is less likely to result in a steep decline in the company's share price.

restructuring charge

The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. It is not considered an extraordinary item and must be considered when calculating a firm's income from continuing operations.
Case Study In August 2001 Procter & Gamble Co. reported the first quarterly loss in nearly a decade. The $320 million quarterly loss resulted from a $1.16 billion restructuring charge to account for corporate streamlining and altering the firm's portfolio of brands. Procter & Gamble was in the process of divesting most of its food and drink business, mostly by entering into a joint venture with Coca-Cola, a plan that was later abandoned. The company reported it planned to continue taking restructuring charges through mid-2004. At the same time P&G reported the net loss, it announced that operating income increased 12% to 60¢ per share. Restructuring charges are often given little weight by investors and analysts who evaluate a company's financial performance, because these charges are considered one-time expenses. The market price of Procter & Gamble's common stock experienced no significant price change on the day the loss was announced.
References in periodicals archive ?
To implement the restructuring program, the company expects total cash spending of $1,500 to $1,700 million by the end of 2020, consisting of $900 to $1,000 million in pre-tax cash restructuring charges and approximately $600 to $700 million in incremental capital spending.
The Company expects to incur restructuring charges of approximately $45 million over a two-year fiscal period, which is incremental to the amounts announced as part of the March 2010 restructuring initiatives.
For example, do prior restructuring charges, the length of the CEO's tenure, and the magnitude of the charge influence these compensation decisions?
Arecent study indicates that analysts may not be misled by restructuring charges and tend to revise their earnings estimate downward after a company announces a restructuring charge.
According to the study, "The Effect of Reporting Restructuring Charges on Analysts' Forecast Revisions and Errors," there's also evidence that many companies don't report extensive details, including dollar amounts, of various restructuring items.
Results include pre-tax restructuring charges of $31,000 and $167,000 for the quarter and six months, respectively.
Management discloses these measures because we believe the measures may assist investors in comparing our results of operations in the respective periods without regard to the effect on results of (i) after-tax restructuring charges and (ii) after-tax acquisition-related charges in the 2011 period.
B&G Foods presents EBITDA (net income before net interest expense, income taxes, depreciation and amortization) and adjusted EBITDA (EBITDA as adjusted for restructuring charges incurred in fiscal 2005) because B&G Foods believes they are useful indicators of its historical debt capacity and ability to service debt.
Accordingly, Equinix uses non-GAAP financial measures such as EBITDA, which the Company defines as income or loss from operations before depreciation, amortization, accretion, stock-based compensation expense and restructuring charges.
Cole, President and Chief Executive Officer, stated, "The restructuring charges reported for the third quarter of 2006 are an integral part of the Strategic Plan that incorporates a disciplined and focused approach to improving the Company's earnings.
In the same period, pre-tax income (excluding restructuring charges taken during the six-month period) totaled US$79 million.
In spite of the lower revenue levels, the fiscal 2006 fourth quarter gross margin and operating profit excluding restructuring charges are expected to be similar to the fiscal 2006 third quarter.