Summary
Danaher Corporation (DHR) filed an 8-K on September 2, 2009, reporting on a new cost reduction initiative approved by its Board of Directors on August 30, 2009. This plan is a response to the global economic recession and its impact on demand for the company's products and services. The new restructuring plan is expected to result in pre-tax charges of approximately $80 million, primarily in the third and fourth quarters of 2009, with cash expenditures estimated at $70 million funded by operations. These actions are incremental to a previously announced $120 million restructuring plan from April 2009, bringing the total expected restructuring charges for 2009 to a range of $225 million to $250 million. Management anticipates these aggregate restructuring activities will yield annual savings of approximately $220 million.
Key Highlights
- 1Danaher's Board approved an additional cost reduction plan on August 30, 2009, due to lower demand from the global recession.
- 2The new plan is expected to incur pre-tax charges of approximately $80 million, mainly in Q3 and Q4 2009.
- 3These charges include employee-related costs ($55M), facility shut-down costs ($15M), and non-cash asset write-offs ($10M).
- 4Approximately $70 million of the charges are expected to be cash expenditures, to be funded by operational cash flow.
- 5This new plan is in addition to a prior restructuring plan announced in April 2009, which totaled $120 million.
- 6The aggregate expected restructuring charges for 2009 are now estimated to be between $225 million and $250 million.
- 7The company anticipates annual savings of roughly $220 million from all restructuring activities initiated in 2009.