Avid 2009 Annual Report Download - page 40

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During 2009, we recorded restructuring charges of $27.7 million, of which $27.9 million related to this plan and a
recovery of ($0.2) million was the result of revised estimates for amounts recorded under previous restructuring plans.
Charges under the plan included new restructuring charges of $27.1 million and revisions to previously recorded
estimates under the plan of $0.8 million. The new restructuring charges included $14.8 million related to employee
termination costs, including those for approximately 320 additional employees; $11.5 million related to the closure of
all or part of eleven facilities; and $0.8 million, recorded in cost of revenues, related to the write-down of PCTV
inventory. The charges resulting from the reduction in force of 320 additional employees were recorded in the third and
fourth quarters and were primarily the result of the expanded use of our internationally based partners for R&D projects
and our desire to better align our 2010 cost structure with revenue expectations.
During the first nine months of 2008, we initiated restructuring plans within our former Professional Video business
unit as well as corporate operations to eliminate duplicative business functions and improve operational efficiencies. In
connection with these actions, we recorded restructuring charges of $4.2 million related to employee termination costs
for approximately 90 employees, primarily in the research and development, marketing and selling, and general and
administrative teams. Also during 2008, we recorded restructuring charges totaling $0.2 million for revised estimates of
previously initiated restructuring plans.
During 2007, we implemented restructuring programs within our former Professional Video and Consumer Video
business units, as well as corporate operations, resulting in restructuring charges of $10.1 million, $1.8 million and $0.3
million, respectively. In connection with these actions, we recorded charges totaling $5.2 million related to employee
termination costs for approximately 125 employees, primarily from the research and development teams and marketing
and selling teams. Actions under these restructuring programs also included the closure of all or parts of five facilities,
resulting in restructuring charges totaling $2.6 million, and our exit from the transmission server product line. As a
result of exiting the transmission server product line, we recorded non-cash charges totaling $4.3 million in cost of
revenues for the write-down of inventory. We also recorded a non-cash restructuring charge of $0.1 million related to
the disposal of fixed assets. The purpose of these restructuring programs was to eliminate duplicative business
functions, improve operational efficiencies and align key business skill sets with future opportunities. Also during 2007,
we recorded restructuring charges totaling $0.8 million as a result of our increased estimates for the facilities
restructuring costs related to our Pinnacle and Medea acquisitions, and $0.4 million primarily as a result of our
increased estimate for the restructuring costs associated with the vacated portion of our Montreal facility that was part
of a restructuring that took place in December 2005.
Gain on Sales of Assets
In the fourth quarter of 2008, we sold our Softimage 3D animation product line, which was part of our former
Professional Video segment, and our PCTV product line, which was part of our former Consumer Video segment. The
Softimage 3D animation product line was sold to Autodesk, Inc., and $26.5 million of the $33.5 million dollar purchase
price was received in the fourth quarter of 2008, with the remaining balance held in escrow with scheduled distribution
dates in 2009 and 2010. During 2008, we recognized a gain of approximately $11.5 million as a result of this
transaction, which does not include the proceeds held in escrow. During 2009, we recorded a further gain of $3.5
million as a result of the release of 50% of the funds from the escrow holdings, in accordance with the terms of the
purchase and sale agreement. The remaining escrow holdings of $3.5 million, subject to possible adjustment, are
scheduled to be released during the fourth quarter of 2010.
The PCTV product line was sold to Hauppauge Digital, Inc. for total proceeds of approximately $4.7 million, which
included $2.2 million in cash and a note valued at $2.5 million. During 2008, we recognized a gain of approximately
$1.8 million as a result of this transaction. PCTV inventory valued at $7.5 million was classified as held-for-sale in
accordance with ASC section 360-10-45, Property, Plant and Equipment – Overall – Other Presentation Matters
(formerly SFAS No. 144), and included in ―other current assets‖ in our consolidated balance sheet at December 31,
2008. Under the terms of the asset purchase agreement, we are reimbursed for the cost of PCTV inventory sold by the
buyer. During 2009, the buyer’s sell through of inventory classified as held-for-sale was lower than anticipated, and, as
a result, we recorded a loss on the sale of assets of $3.2 million related to our sale of the PCTV product line. At
December 31, 2009, the remaining value of inventory classified as held-for-sale was $0.4 million.