Adaptec 2001 Annual Report Download - page 26

Download and view the complete annual report

Please find page 26 of the 2001 Adaptec annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 93

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93

26
The elements of the accrued restructuring costs related to the March 2001 restructuring plan are
as follows:
Workforce reduction includes the cost of severance and related benefits of 223 employees
affected by the restructuring. These terminations were spread across all business functions,
with approximately 70% occurring in Research and Development and the remainder occurring
in Sales, Marketing and Administrative and Production departments.
Facility lease and contract settlement costs include: (i) lease termination payments and other
costs related to the closure of certain corporate facilities, sales offices and research and
development centers for activities that have been exited or restructured; and (ii) penalties
incurred due to our withdrawal from certain purchase contracts.
Certain leasehold improvements located at the closed facilities and computer equipment and
software licenses were determined to be impaired as a result of the restructuring activities and
were written down to estimated fair market value, net of disposal costs.
We expect to complete the restructuring activities contemplated in the March 2001 plan by the
end of March 2002. Upon conclusion of these restructuring activities, we expect to achieve
annualized savings of approximately $28.2 million in cost of revenues and operating expenses.
Restructuring – October 18, 2001
Due to the continued decline in market conditions, we implemented a second restructuring
plan in the fourth quarter of 2001 to reduce our operating cost structure. Prior to the end of the
fourth quarter, management approved the second restructuring plan committing PMC to the
termination of 341 employees, the consolidation of additional excess facilities, and the
curtailment of additional research and development projects. Employees terminated under this
plan were advised prior to the end of the quarter of the termination benefits to w hich they were
entitled. As a result, we recorded a second restructuring charge of $175.3 million in our fourth
quarter.
Total Charge Noncash Cash Restructuring Liability at
(in thousands) March 26, 2001 Charges Payments December 31, 2001
Workforce reduction 9,367$ -$ $ (7,791) $ 1,576
Facility lease and contract settlement costs 6,545 - (3,917) 2,628
Write-down of property and equipment, net 3,988 (3,988) - -
Total 19,900$ (3,988)$ (11,708)$ 4,204$