In October 2012, as part of Invigorate, we launched a major management
restructuring aimed at driving operational excellence and restoring growth. We
have completed the elimination of at least three layers from the organization,
and have reduced approximately 450 management positions through the end of the
second quarter of 2013, contributing about $80 million of the $600 million in
expected savings associated with our Invigorate program. We expect to eliminate
a total of approximately 500 management positions by the end of 2013. In the six
months ended June 30, 2013, we recorded approximately $18.5 million of employee
separation costs associated this management restructuring initiative, and are
on-track to meet our expected savings in 2013.
As a result of our Invigorate program, we expect to deliver more than $250
million in realized savings in 2013 versus 2012. Furthermore, we continue to
track well against our goal to deliver $600 million of run rate savings by the
end of 2014.
Our high-level estimates of the pre-tax charges expected to be incurred
through 2014 in connection with our Invigorate program remain unchanged. The
total estimated pre-tax charges range from $170 million to $250 million and
consist of $90 million to $135 million of employee separation costs; $30 million
to $45 million of facility-related costs; $10 million to $20 million of asset
impairment charges; and $40 million to $50 million of systems conversion and
integration costs. Of the total estimated pre-tax charges expected to be
incurred, we estimate that $160 million to $230 million are anticipated to
result in cash expenditures. The actual charges incurred in connection with the
multi-year course of action could be materially different from these estimates.
As detailed plans to implement the multi-year course of action are approved and
executed, it will result in charges to earnings. Through June 30, 2013, the
cumulative charge recorded in connection with the Invigorate program totaled
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For additional information on the Invigorate program and associated costs (see
Note 4 to the Consolidated Financial Statements).
Divestiture of Business
In April 2013, we completed the sale of HemoCue, our diagnostic point-of-care
testing business ("HemoCue"). As a
result of the sale, discontinued operations for the three and six months ended
June 30, 2013 includes a gain of $13.3 million.
Sale of Future Royalty Rights
In July 2013
, we completed the sale of our rights to royalties from
commercialization of the drug candidate ibrutinib to Royalty Pharma, Inc.
in cash. We are entitled to these rights pursuant to a royalty
agreement between Celera Corporation
(which we acquired in May 2011
Acquisition of Businesses from UMass Memorial Medical Center