RESTRUCTURING

On an ongoing basis, we review the global economy, the healthcare industry, and the markets in which we compete. From these reviews we identify opportunities to improve efficiencies, enhance commercial capabilities, better align our resources and offer customers better comprehensive solutions. In order to realize these opportunities, from time to time, we undertake restructuring and other initiatives to transform our business.

On May 1, 2013 we announced that our Board of Directors has approved a plan to pursue identified Value Creation & Capture (“VCC”) opportunities. These include: (i) investment in product line extensions, next generation products and growth platforms; (ii) enhancement of commercial execution capabilities by implementing go-to-market and other strategies to enable global profitable revenue growth; and (iii) transformation of the manufacturing network to best support these commercial strategies while optimizing expense levels. Collectively, these are opportunities to position us for optimal growth and increased competitiveness.

Transformation of the manufacturing network will take place through fiscal 2016, and will involve (i) discontinuing manufacturing activities at our Braintree, Massachusetts and Ascoli-Piceno, Italy locations, (ii) creating a technology center of excellence for product development close to our current Corporate Headquarters, (iii) expansion of our current facility in Tijuana, Mexico, (iv) engaging Sanmina Corporation as a contract manufacturer to produce certain medical equipment, and (v) building a new manufacturing facility in Penang, Malaysia closer to our customers in Asia.

For the nine months ended December 28, 2013, we incurred $40.8 million of restructuring and restructuring related charges of which approximately $16.0 million has been paid to date and approximately $14.4 million is payable within the next twelve months. The substantial majority of restructuring expenses have been included as a component of selling, general and administrative expense in the accompanying consolidated statements of income and comprehensive income.

The following summarizes the restructuring activity for the nine months ended December 28, 2013 and December 29, 2012:



	Nine Months Ended December 28, 2013
(In thousands)		Restructuring Accrual Balance at March 30, 2013		Restructuring Costs Incurred		Less Payments			Less Non-Cash Adjustments			Restructuring Accrual Balance at December 28, 2013
Severance and other employee costs		$	3,089	$	28,189	$	(9,690	)	$	—		$	21,588
Other costs		173		9,905		(9,566		)	—			512
Accelerated depreciation		—		1,757		—			(1,757		)	—
Asset write-down		—		915		—			(915		)	—
Total		$	3,262	$	40,766	$	(19,256	)	$	(2,672	)	$	22,100



	Nine Months Ended December 29, 2012
(in thousands)	Restructuring Accrual Balance at March 31, 2012		Restructuring Costs Incurred		Less Payments			Less Non-Cash Adjustments		Restructuring Accrual Balance at December 29, 2012
Severance and other employee costs	$	1,461	$	4,807	$	(3,682	)	$	—	$	2,586
Other costs	533		418		(741		)	—		210
Total	$	1,994	$	5,225	$	(4,423	)	$	—	$	2,796

We are deploying significant financial resources for these activities. Many of the activities necessary to complete the VCC initiatives include severance and other costs which qualify as restructuring expenses under ASC 420, Exit or Disposal Cost Obligations. We anticipate we will incur approximately $71.0 million in severance, asset write-offs and other restructuring charges as well as other “Transformation Costs” related to VCC initiatives in fiscal 2014. The majority of these costs relates to the discontinuation of manufacturing activities in Braintree, Massachusetts and Ascoli-Piceno, Italy, and will be incurred in the current fiscal year.

In addition, we also incur costs that do not constitute restructuring under ASC 420, Exit or Disposal Cost Obligations which we refer to as "Transformation Costs". These costs consist primarily of expenditures directly related to our transformation activities including program management, integration and product line transfer teams, infrastructure related costs, accelerated depreciation and asset disposals.

The table below presents transformation and restructuring costs recorded in cost of goods sold, research and development, selling, general and administrative expenses and interest and other expense in our statement of income and comprehensive income for the periods presented. The majority of expenses recorded as Transformation Costs in the prior year relate to the integration of Pall's transfusion medicine business, which was purchased for $535.1 million in August 2012. Transformation Costs in the current year are associated with our VCC initiatives as well as completion of the integration of Pall’s transfusion medicine business. We anticipate that we will incur approximately $82.0 million in total restructuring and transformation expenses related to VCC initiatives and completion of whole blood integration activities in fiscal 2014 of which $72 million is payable in cash.



Transformation costs	Three Months Ended				Nine Months Ended
(in thousands)	December 28, 2013		December 29, 2012		December 28, 2013		December 29, 2012
Integration and other costs	$	6,306	$	22,138	$	26,389	$	49,963
Accelerated depreciation	653		—		1,938		—
Asset disposal	36		—		796		—
Total	$	6,995	$	22,138	$	29,123	$	49,963



Restructuring costs	Three Months Ended				Nine Months Ended
(in thousands)	December 28, 2013		December 29, 2012		December 28, 2013		December 29, 2012
Severance and other employee costs	$	5,348	$	2,737	$	28,189	$	4,807
Other costs	4,588		209		9,905		418
Accelerated depreciation	569		—		1,757		—
Asset disposal	—		—		915		—
Total	$	10,505	$	2,946	$	40,766	$	5,225

Total restructuring and transformation	$	17,500	$	25,084	$	69,889	$	55,188