As part of this expanded restructuring, OOMC has committed to staff reductions under a plan of termination that will eliminate approximately 575 positions in addition to the 615 positions announced on May 15, 2007. The Company expects to incur a pre-tax restructuring charge in fiscal year 2008 of approximately $19 million in connection with the expanded restructuring plan (approximately $15 million of which will result in future cash expenditures). This restructuring charge is in addition to the restructuring charge announced on May 15, 2007. The restructuring charge consists of approximately $11 million in one-time termination benefits, approximately $5 million in lease termination costs and approximately $3 million in other miscellaneous costs.The company had orginally disclosed that it intended to expand its layoffs on August 6th; tonight's filing with the SEC updates that information with a formal estimate of the number of impacted employees and the associated financial fallout for Option One. Option One said the cuts will be made before the end of this year, but did not specify what areas of its business would be most affected. The subprime lender has been the subject of significant speculation recently, with a pending sale to private equity investor Cerberus Capital Managment LP now cast as unlikely and the company's CEO referencing the Great Depression in a recent investor call. My best wishes go out to those caught up in what's taking place at Option One, as I know many employees at the company read this blog daily.
Option One to Slash 575 Additional Jobs
Per an SEC filing tonight, H&R Block, Inc. said it is expanding its restructuring efforts for its troubled subprime mortgage sub Option One Mortage Company and will eliminate an additional 575 jobs beyond originally-reported numbers. From the filing: