8. Facility Consolidation and Other Cost Reduction Actions

During the second quarter of 2012, Covance commenced a series of actions to better align capacity to preclinical market demand and reduce overhead in its early development segment, as well as to improve future profitability by streamlining its overall cost structure, including its corporate and functional support infrastructure and consolidating facilities in connection with the rationalization of its data centers. These actions included the closure of the Company’s toxicology facility in Chandler, Arizona, its clinical pharmacology facilities in Honolulu, Hawaii and Basel, Switzerland, as well as a capacity and workforce reduction in Muenster, Germany. Costs associated with the restructuring component of these actions during the three and six months ended June 30, 2013 totaled $3.4 million (which has been included in selling, general and administrative expenses) and $9.5 million ($8.0 million of which has been included in selling, general and administrative expenses and $1.5 million of which has been included in depreciation and amortization), respectively. Costs associated with the restructuring component of these actions during the three and six months ended June 30, 2012, totaled $9.7 million ($8.5 million of which has been included in selling, general and administrative expenses and $1.2 million of which has been included in depreciation and amortization). These restructuring actions are expected to be completed in 2014.

The following table sets forth the costs incurred in connection with these restructuring activities during the three and six month periods ended June 30, 2013 and 2012:

	Three Months Ended June 30					Six Months Ended June 30
	2013			2012		2013		2012
Employee separation costs	$	2,148		$	7,782	$	4,145	$	7,782
Lease and facility exit costs	(39		)	—		627		—
Accelerated depreciation and amortization	—			1,209		1,497		1,209
Other costs	1,250			676		3,260		676
Total	$	3,359		$	9,667	$	9,529	$	9,667

The following table sets forth the restructuring costs by segment incurred during the three and six month periods ended June 30, 2013 and 2012:

	Three Months Ended June 30				Six Months Ended June 30
	2013		2012		2013		2012
Early Development	$	1,316	$	9,197	$	4,869	$	9,197
Late-Stage Development	1,363		179		3,261		179
Corporate expenses	680		291		1,399		291
Total	$	3,359	$	9,667	$	9,529	$	9,667

Total costs for these restructuring actions are expected to approximate $48 million, including $28 million in employee separation costs, $5 million in lease and facility exit costs, $5 million in accelerated depreciation and amortization and $10 million in other costs. Costs by segment are expected to total $37 million in our early development segment, $5 million in our late-stage development segment and $6 million in corporate expenses.

Cumulative costs for these actions through June 30, 2013 totaled $43.4 million, of which $38.4 million was included in selling, general and administrative expenses and $5.0 million was included in depreciation and amortization. Cumulative costs incurred by category for these actions through June 30, 2013 totaled $27.0 million in employee separation costs, $4.5 million in lease and facility exit costs, $5.0 million in accelerated depreciation and $6.9 million in other costs. Cumulative costs incurred by segment through June 30, 2013 totaled $35.2 million in our early development segment, $4.6 million in our late-stage development segment and $3.6 million in corporate expenses.

The following table sets forth the rollforward of the restructuring activity for the six months ended June 30, 2013:

Description	Balance, Dec 31, 2012		Total Charges		Cash Payments			Other			Balance, June 30, 2013
Employee separation costs	$	11,236	$	4,145	$	(10,010	)	$	(43	)	$	5,328
Lease and facility exit costs	3,733		627		(1,018		)	(25		)	3,317
Accelerated depreciation and amortization	—		1,497		—			(1,497		)	—
Other costs	171		3,260		(3,213		)	—			218
Total	$	15,140	$	9,529	$	(14,241	)	$	(1,565	)	$	8,863

Other costs include charges incurred in connection with transitioning services from sites being closed and legal and professional fees. Other activity in the reserve rollforward primarily reflects accelerated depreciation and amortization and foreign exchange impacts as a result of the change in exchange rates between periods.

In addition to the above restructuring costs, in the three and six months ended June 30, 2013, Covance incurred $2.6 million in costs associated with other cost reduction actions, primarily to consolidate certain corporate support functions ($1.7 million included in selling, general and administrative expense), as well as property tax and depreciation expense on facilities that have been closed but not yet disposed of ($0.3 million included in selling, general and administrative expense and $0.6 million included in depreciation and amortization). These costs are included in our early development segment ($1.0 million) and corporate expenses ($1.6 million).

During the first quarter of 2013, Covance completed the closure of its clinical pharmacology facility in Basel, Switzerland and initiated actions to sell that property. As a result, the $8.3 million carrying value of the property was reclassified from property and equipment to an asset held for sale in other current assets on the consolidated balance sheet as of March 31, 2013.

In the second quarter of 2012, Covance recorded a $20.8 million charge in the early development segment to reflect the impairment of certain research product inventory based on current and expected future demand. These costs have been included in cost of sales in the early development segment.