Henry Schein 2014 Annual Report Download - page 97

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HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(in thousands, except per share data)
83
Note 9 – Business Acquisitions and Divestiture – (Continued)
Divestiture of an Equity Affiliate
On July 10, 2013, we divested our investment in a dental wholesale distributor in the Middle East that had
primarily served as an importer that distributed products largely to other distributors. The divestiture resulted in a
one-time loss, which is recorded in a separate line item, “Loss on sale of equity investment” within our
consolidated statements of income and within the cash flows from operating activities section of our consolidated
statements of cash flows, of $12.5 million, or $0.14 per diluted share, in the third quarter of 2013. Pursuant to the
terms of this divestiture, we made cash payments, which are recorded in a separate line item, “Payments related to
sale of equity investment”, within the cash flows from investing activities section of our consolidated statements of
cash flows, to this distributor in the aggregate amount of $13.4 million, which it was required to use to
reduce its debt, pay certain trade payables and provide working capital. The investment in this distributor had been
fully impaired as of the end of 2012. There was no tax benefit related to the loss on this divestiture.
Note 10 – Plans of Restructuring
On November 6, 2014, we announced a corporate initiative to rationalize our operations and provide expense
efficiencies, which will occur throughout fiscal 2015. This initiative is expected to include the elimination of
approximately 2% to 3% of our workforce and the closing of certain facilities. The costs associated with all actions
to complete this restructuring are expected to be in the range of $35 million to $40 million pre-tax (approximately
$0.29 to $0.33 per diluted share). We plan to reduce our cost structure to fund new initiatives to drive future
growth as our 2015 – 2017 strategic planning cycle begins. At this time, we are unable to make a determination of
the estimated amount or range of amounts to be included for each major type of cost associated with this
restructuring (including associated cash expenditures). We will provide further details in a future Securities and
Exchange Commission filing at such time as we are able to determine the costs we expect to incur in connection
with this restructuring.
During the year ended December 29, 2012, we incurred restructuring costs of approximately $15.2 million pre-
tax ($0.12 per diluted share) consisting of employee severance pay and benefits related to the elimination of
approximately 200 positions; facility closing costs, representing primarily lease terminations and property and
equipment write-off costs; and outside professional and consulting fees directly related to the restructuring plan.
This restructuring program is complete and we do not expect any additional costs from this program.
The costs associated with these restructurings have been and will be included in a separate line item,
“Restructuring costs” within our consolidated statements of income.
The following table shows the amounts expensed and paid for restructuring costs that were incurred during our
2014, 2013 and 2012 fiscal years and the remaining accrued balance of restructuring costs as of December 27,
2014, which is included in Accrued expenses: Other and Other liabilities within our consolidated balance sheet:
Facility
Severance Closing
Costs Costs Total
Balance, December 31, 2011 .........................................................
.
$ 569 $ 551 $ 1,120
Provision .......................................................................................
.
12,841 2,351 15,192
Payments and other adjustments ...................................................
.
(11,584) (1,671) (13,255)
Balance, December 29, 2012 .........................................................
.
$ 1,826 $ 1,231 $ 3,057
Provision .......................................................................................
.
- - -
Payments and other adjustments ...................................................
.
(1,599) (747) (2,346)
Balance, December 28, 2013 .........................................................
.
$ 227 $ 484 $ 711
Provision .......................................................................................
.
- - -
Payments and other adjustments ...................................................
.
(107) (183) (290)
Balance, December 27, 2014 .........................................................
.
$ 120 $ 301 $ 421