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81
and any corresponding adjustments to the accrual are recorded in the Company’s statement of operations in the period
when such changes are known.
In connection with the 2005 Pinnacle and 2006 Medea acquisitions, the Company recorded accruals of $14.4 million
and $1.1 million, respectively, related to severance agreements and lease or other contract terminations in accordance
with EITF Issue No. 95-3, Recognition of Liabilities in Connection with a Purchase Business Combination. During
the third quarter of 2007, the Company recorded a $0.7 million increase in the estimate for the Pinnacle accrual and a
corresponding restructuring charge in the Company’s statement of operations. Similarly, in the first quarter of 2007,
the Company recorded a $0.1 million increase in the estimate for the Medea accrual and a corresponding restructuring
charge. During the second quarter of 2008, the Company recorded a $0.1 million decrease in the estimate for the
Medea restructuring accrual and a corresponding decrease in goodwill.
The following table sets forth the activity in the restructuring accruals for the years ended December 31, 2008, 2007
and 2006 (in thousands):
Non-Acquisition-Related
Restructuring
Liabilities
Acquisition-Related
Restructuring
Liabilities
Employee-
Related
Facilities-
Related
& Other
Employee-
Related
Facilities-
Related Total
Accrual balance at December 31, 2005 $129 $ 4,467 $ 2,976
$ 2,785 $ 10,357
New restructuring charges 4,546 158 725 351 5,780
Revisions of estimated liabilities (183) (2,088)(1,908 ) (662) (4,841)
Accretion
—
123 — 55 178
Cash payments for employee-related charges (2,125)
—
(1,016 )
—
(3,141)
Cash payments for facilities, net of sublease income
—
(1,336)—
(1,222)
(2,558)
Foreign exchange impact on ending balance 66 270 155
197 688
Accrual balance at December 31, 2006 2,433 1,594 932
1,504
6,463
New restructuring charges – operating expenses 5,247 2,681 —
—
7,928
New restructuring charges – cost of revenues
—
4,278 —
—
4,278
Revisions of estimated liabilities 320 324 (370 ) 1,193 1,467
Accretion
—
122 — 44 166
Cash payments for employee-related charges (6,916)
—
(570 )
—
(7,486)
Cash payments for facilities, net of sublease income
—
(1,467)—
(671)
(2,138)
Non-cash write-offs
—
(4,387) — (53) (4,440)
Foreign exchange impact on ending balance 102 111 10 24 247
Accrual balance at December 31, 2007 1,186 3,256 2 2,041 6,485
New restructuring charges – operating expenses 24,413 690 —
—
25,103
New restructuring charges – cost of revenues
—
1,876 —
—
1,876
Revisions of estimated liabilities (85) 450 (2 ) (186) 177
Accretion
—
88 —
52 140
Cash payments for employee-related charges (11,274)
—
—
—
(11,274)
Cash payments for facilities, net of sublease income
—
(2,054) — (739) (2,793)
Non-cash write-offs
—
(1,892) —
—
(1,892)
Foreign exchange impact on ending balance 849 (215) — (339) 295
Accrual balance at December 31, 2008 $ 15,089 $ 2,199 $ — $ 829 $ 18,117
The employee-related accruals at December 31, 2008 represent severance and outplacement costs to former
employees that will be paid out within the next twelve months and are, therefore, included in the caption “accrued
expenses and other current liabilities” in the Company’s consolidated balance sheet as of December 31, 2008.
The facilities-related accruals at December 31, 2008 represent estimated losses, net of subleases, on space vacated as
part of the Company’s restructuring actions. The leases, and payments against the amounts accrued, extend through