SUPPLEMENTAL BALANCE SHEET INFORMATION
Accounts Receivable—Trade
In the normal course of business, we extend credit to customers that satisfy pre-defined credit criteria, based upon the results of our recurring financial account reviews and our evaluation of current and projected economic conditions. Our primary concentrations of credit risk are associated with Wal-Mart Stores, Inc. and McLane Company, Inc. McLane Company, Inc. is one of the largest wholesale distributors in the United States to convenience stores, drug stores, wholesale clubs and mass merchandisers. As of December 31, 2013, McLane Company, Inc. accounted for approximately 17.3% of our total accounts receivable. Wal-Mart Stores, Inc. accounted for approximately 14.5% of our total accounts receivable as of December 31, 2013. No other customer accounted for more than 10% of our year-end accounts receivable. We believe that we have little concentration of credit risk associated with the remainder of our customer base. Accounts Receivable-Trade, as shown on the Consolidated Balance Sheets, were net of allowances and anticipated discounts of $14.3 million as of December 31, 2013 and $15.2 million as of December 31, 2012.
Inventories
We value the majority of our inventories in the U.S. under the last-in, first-out (“LIFO”) method. The remainder of our inventories in the U.S. and inventories for our international businesses are valued at the lower of first-in, first-out (“FIFO”) cost or market. Inventories include material, labor and overhead. LIFO cost of inventories valued using the LIFO method was $314.9 million as of December 31, 2013 and $331.7 million as of December 31, 2012. The net impact of LIFO acquisitions and liquidations during 2013 was not material. We stated inventories at amounts that did not exceed realizable values. Total inventories were as follows:
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| | | | | | | | |
December 31, | | 2013 | | 2012 |
In thousands of dollars | | | | |
Raw materials | | $ | 226,978 |
| | $ | 256,969 |
|
Goods in process | | 79,861 |
| | 78,292 |
|
Finished goods | | 517,968 |
| | 496,981 |
|
Inventories at FIFO | | 824,807 |
| | 832,242 |
|
Adjustment to LIFO | | (165,266 | ) | | (198,980 | ) |
Total inventories | | $ | 659,541 |
| | $ | 633,262 |
|
Property, Plant and Equipment
The property, plant and equipment balance included construction in progress of $273.1 million as of December 31, 2013 and $217.5 million as of December 31, 2012. As of December 31, 2012, construction in progress included $41.1 million associated with payments made by Ferrero under an agreement for the construction of a warehouse and distribution facility of which the Company has been deemed to be the owner for accounting purposes. Major classes of property, plant and equipment were as follows:
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| | | | | | | | |
December 31, | | 2013 | | 2012 |
In thousands of dollars | | | | |
| | | | |
Land | | $ | 96,334 |
| | $ | 92,916 |
|
Buildings | | 956,890 |
| | 878,527 |
|
Machinery and equipment | | 2,726,170 |
| | 2,589,183 |
|
| | | | |
Property, plant and equipment, gross | | 3,779,394 |
| | 3,560,626 |
|
Accumulated depreciation | | (1,974,049 | ) | | (1,886,555 | ) |
| | | | |
Property, plant and equipment, net | | $ | 1,805,345 |
| | $ | 1,674,071 |
|
During 2012, we recorded accelerated depreciation of property, plant and equipment of $15.3 million associated with the Next Century program.
Goodwill and Other Intangible Assets
Goodwill and intangible assets were as follows:
|
| | | | | | | | |
December 31, | | 2013 | | 2012 |
In thousands of dollars | | | | |
| | | | |
Unamortized intangible assets: | | | | |
Goodwill balance at beginning of year | | $ | 588,003 |
| | $ | 516,745 |
|
Effect of foreign currency translation | | (11,442 | ) | | 3,284 |
|
Acquisitions | | — |
| | 67,974 |
|
| | | | |
Goodwill balance at end of year | | $ | 576,561 |
| | $ | 588,003 |
|
| | | | |
Trademarks with indefinite lives | | $ | 81,465 |
| | $ | 81,465 |
|
Amortized intangible assets, gross: | | | | |
Trademarks | | 64,436 |
| | 68,490 |
|
Customer-related | | 72,094 |
| | 74,790 |
|
Intangible asset associated with cooperative agreement with Bauducco | | 13,683 |
| | 13,683 |
|
Patents | | 19,278 |
| | 20,018 |
|
Effect of foreign currency translation | | (9,256 | ) | | (6,470 | ) |
| | | | |
Total other intangible assets, gross | | 241,700 |
| | 251,976 |
|
Accumulated amortization: | | | | |
Trademarks | | (5,190 | ) | | (2,250 | ) |
Customer-related | | (26,853 | ) | | (22,990 | ) |
Intangible asset associated with cooperative agreement with Bauducco | | (7,379 | ) | | (6,294 | ) |
Patents | | (9,737 | ) | | (7,411 | ) |
Effect of foreign currency translation | | 2,703 |
| | 1,682 |
|
Total accumulated amortization | | (46,456 | ) | | (37,263 | ) |
| | | | |
Other intangibles | | $ | 195,244 |
| | $ | 214,713 |
|
In January 2012, we acquired all of the outstanding stock of Brookside, a privately held confectionery company based in Abbotsford, British Columbia, Canada. For more information, see Note 2, Business Acquisitions.
Accumulated impairment losses associated with goodwill were $70.1 million as of December 31, 2013, and 2012. Accumulated impairment losses associated with trademarks were $46.7 million as of December 31, 2013, and 2012.
The useful lives of certain trademarks were determined to be indefinite and, therefore, we are not amortizing these assets. We amortize customer-related intangible assets over their estimated useful lives of approximately 15 years. We amortize trademarks with finite lives over their estimated useful lives of 25 years. We amortize patents over their remaining legal lives of approximately 5 years. Total amortization expense for other intangible assets was $10.8 million in 2013, $10.6 million in 2012 and $4.6 million in 2011.
Estimated annual amortization expense for other intangible assets over the next five years is as follows:
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| | | | | | | | | | | | | | | | | | | | |
Annual Amortization Expense | | 2014 | | 2015 | | 2016 | | 2017 | | 2018 |
In thousands of dollars | | | | | | | | | | |
| | | | | | | | | | |
Estimated amortization expense | | $ | 10,452 |
| | $ | 9,916 |
| | $ | 9,913 |
| | $ | 9,245 |
| | $ | 8,151 |
|
Accrued Liabilities
Accrued liabilities were as follows:
|
| | | | | | | | |
December 31, | | 2013 | | 2012 |
In thousands of dollars | | | | |
| | | | |
Payroll, compensation and benefits | | $ | 245,641 |
| | $ | 236,598 |
|
Advertising and promotion | | 348,966 |
| | 289,221 |
|
Other | | 105,115 |
| | 125,087 |
|
| | | | |
Total accrued liabilities | | $ | 699,722 |
| | $ | 650,906 |
|
Other Long-term Liabilities
Other long-term liabilities were as follows:
|
| | | | | | | | |
December 31, | | 2013 | | 2012 |
In thousands of dollars | | | | |
| | | | |
Post-retirement benefits liabilities | | $ | 245,460 |
| | $ | 292,234 |
|
Pension benefits liabilities | | 50,842 |
| | 240,215 |
|
Other | | 137,766 |
| | 136,283 |
|
| | | | |
Total other long-term liabilities | | $ | 434,068 |
| | $ | 668,732 |
|
