Adaptec 2006 Annual Report Download - page 90

Table of Contents
24 employees across all business functions. In the second quarter of 2005, the Company expanded the workforce reduction activities initiated during the first
quarter of 2005 and terminated 63 employees from research and development located in the Santa Clara facility. In addition, the Company consolidated its two
manufacturing facilities (Santa Clara, California and Burnaby, British Columbia) into one facility (Burnaby), which involved the termination of 26 employees
from production control, quality assurance, and product engineering. As a result, the Company recorded total second quarter restructuring charges of $7.6 million
including $6.7 million for termination benefits and a $0.9 million write-down of equipment and software assets whose value was impaired as a result of these
plans. On completion of these workforce reduction activities, in the third quarter of 2005 the Company consolidated its facilities and vacated excess office space
in the Santa Clara location, and recorded a restructuring charge of $5.3 million for excess facilities and an additional $0.1 million in severance costs.
In the first quarter of 2006, the Company continued its workforce reduction plans initiated in 2005 and recorded $1.6 million restructuring charges related to the
termination of 19 employees, primarily from research and development, in the Santa Clara facility. During the third quarter of 2006 the Company reduced its
estimated severance accrual related to the 2005 workforce reduction activities by $0.4 million, and increased the accrual for excess facilities related to the 2005
restructuring by $0.8 million.
To date, the Company has made payments relating to these activities of $10.6 million. As of December 31, 2006, the software assets have been disposed of and
$0.1 million severance costs remained to be paid in 2007. Payments related to the excess facilities will extend to 2011.
2003 and 2001
In 2003 and 2001, the Company implemented three restructuring plans aimed at focusing development efforts on key projects and reducing operating costs in
response to the severe and prolonged economic downturn in the semiconductor industry. PMC’s assessment of the market demand for its products, and the
development efforts necessary to meet this demand, were key factors in its decisions to implement these restructuring plans. As end markets for the Company’s
products had contracted, certain projects were curtailed in an effort to cut costs. Cost reductions in all other functional areas were also implemented, as fewer
resources were required to support the reduced level of development and sales activities during these periods.
The January 2003 restructuring included the termination of 175 employees and the closure of design centers in Maryland, Ireland and India. To date, PMC has
recorded a restructuring charge of $18.3 million including $1.5 million for asset write-downs. These charges related to workforce reduction, lease and contract
settlement costs, and the write-down of certain property, equipment and software assets whose value was impaired as a result of this restructuring plan. The
Company has disposed of the property improvements and computer equipment, and software licenses have been cancelled or are no longer being used. In 2006,
the Company reversed $2.3 million of its restructuring accrual because certain floors in the Santa Clara facility that had been vacated in 2003 were re-occupied in
2006 due to the acquisition of the Storage Semiconductor Business.
The October 2001 restructuring plan included the termination of 341 employees, the consolidation of excess facilities, and the curtailment of certain research and
development
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Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research℠