Woodward records anticipated charges related to Duarte relocation
Woodward announced that it has recorded in its second quarter of fiscal 2018 specific charges totaling $17 million pre-tax, or 20c per diluted share, primarily related to its previously announced decision to move its operations located in Duarte, CA to the recently renovated Drake Campus in Fort Collins, CO. As mentioned in the previous announcement, the Duarte facility is unable to support the significant amount of new business recently awarded, including a major thrust reverser actuation system contract with Airbus. A related facilities study concluded that the Drake Campus presented the best opportunity considering a variety of relevant criteria. Included in the $17 million of specific charges is approximately $12.5 million of workforce management costs associated with the transfer of the business from Duarte to Fort Collins. An engineering center will remain in the Duarte area. In addition to the specific charges, Woodward anticipates incurring certain move related costs such as expenses associated with moving equipment, employee training, accelerated depreciation, and increased labor expenses over the coming year. "We anticipate these expenses will vary by quarter, but are expected to be approximately $12 million in total. Woodward is exploring various options with respect to the Duarte property and believes that a gain will be realized upon its disposition, which is anticipated to offset the specific charges and other costs associated with the Duarte relocation. In our Industrial segment, while Woodward has already taken considerable actions to redeploy our workforce and reduce costs, the specific charges also include approximately $4.5 million of workforce management costs related to aligning our industrial turbomachinery business with current market conditions. Beginning with the second quarter of our fiscal year, in addition to earnings as reported under US-GAAP, Woodward will report adjusted earnings, which will exclude the specific charges mentioned above as well as the incremental costs associated with the Duarte relocation."