Summary
Cardinal Health Inc. (CAH) announced a restructuring plan within its Medical segment, detailed in an 8-K filing dated January 30, 2013. This plan involves consolidating production of procedure kits, selling property and office space in Waukegan, Illinois, and divesting sterilization processes in El Paso, Texas. The company anticipates incurring approximately $79 million in pre-tax costs associated with these exit and disposal activities, including an expected loss on disposal, employee-related costs, and facility exit costs. While the segment reporting structure will remain unchanged, the company expects to recognize a write-down on Waukegan property in fiscal year 2014 when it meets 'held for sale' criteria. The majority of the restructuring costs, about $33 million, are expected to result in future cash expenditures. Management anticipates the plan's completion by the end of fiscal year 2014, with cost savings and benefits beginning in the same fiscal year.
Key Highlights
- 1Cardinal Health is undertaking a restructuring plan within its Medical segment.
- 2The plan includes moving production, selling facilities in Waukegan, IL, and selling sterilization processes in El Paso, TX.
- 3Total estimated pre-tax costs for the restructuring are approximately $79 million.
- 4These costs include an expected $25 million loss on disposal, $33 million in employee-related costs, and $21 million in facility exit costs.
- 5Approximately $33 million of the restructuring costs are expected to be future cash expenditures.
- 6The company anticipates completing the restructuring by the end of fiscal year 2014.
- 7Cost savings and benefits from the restructuring are expected to begin in fiscal year 2014.