2012 Special Charges and Expenses Associated with Streamlining Activities
During fiscal 2012, the Company incurred a total of $17.7 million of pre-tax special charges for streamlining activities and for expenses associated with the closing of the Cochran production facility. The $17.7 million consisted of special charges related to streamlining activities totaling $13.3 million, $3.2 million of higher costs directly related to manufacturing inefficiencies associated with the closing of the Cochran facility, and $1.2 million of non-cash expenses related to the abandonment of certain otherwise usable inventory at the facility. The Company expects to record an additional pre-tax special charge of approximately $2 million associated with the closing of the Cochran facility along with related production inefficiencies of approximately $3 million, however, the amounts could vary depending on the timing of the transfer of production. The Company estimates that the total annualized pre-tax savings associated with all streamlining activities initiated in 2012, including the closure of the Cochran facility, to be approximately $14 million of which approximately $4 million was realized in fiscal 2012, including $2 million of benefits realized in the fourth quarter of fiscal 2012. The Company expects to be at the total annualized savings run rate from the streamlining activities by the end of the first quarter of fiscal 2013 following the completion of the transfer of production and closure of the facility.
Mr. Nagel commented, “We remain very positive about the future prospects for our Company and our ability to outperform the markets we serve. We continue to position the Company to optimize short-term performance while investing in and deploying resources to capitalize on our long-term profitable growth opportunities. While we are optimistic about our future prospects and ability to outperform the markets we serve, we do see the possibility for continuing volatility in demand due to the weak pace of economic recovery in the United States and globally.