Memorex 2010 Annual Report Download - page 24

Based on the goodwill test performed in the second quarter of 2010, we determined that the carrying amount of the
reporting unit significantly exceeded its fair value and that the $23.5 million of goodwill was fully impaired. See Note 6 to
the Consolidated Financial Statements for further information about the goodwill impairment.
During the fourth quarter of 2008, in connection with our annual goodwill impairment test, impairments were identified
and recorded in an aggregate amount of $32.4 million related to the Americas-Commercial, Asia Pacific and Electronic
Products reporting units. We also recorded $2.3 million of goodwill impairments during the fourth quarter of 2008 related to
the Americas-Commercial reporting unit included in discontinued operations in our Consolidated Statements of Operations.
During the fourth quarter of 2008, the continuing and accelerating deterioration of general economic conditions contributed
to shortfalls in our anticipated fourth quarter 2008 operating profitability and resulted in lower expectations for growth and
profitability in future periods. In addition, we experienced a decline in our stock price reflecting a further reduction in a
market participant’s view of fair value of our underlying reporting units.
See Notes 2 and 6 to the Consolidated Financial Statements as well as Critical Accounting Policies and Estimates
for further background and information on goodwill impairment.
Restructuring and Other
The components of our restructuring and other expense included in the Consolidated Statements of Operations were
as follows:
2010 2009 2008
Years Ended December 31,
(In millions)
Restructuring
Severance and severance related . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13.0 $11.2 $15.7
Lease termination costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 0.7 4.8
Total restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.7 11.9 20.5
Pension settlement/curtailment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 11.7 5.7
Asset impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.2 2.7 5.0
TDK post-closing purchase price adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (2.3)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 0.3 —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $51.1 $26.6 $28.9
2011 Manufacturing Redesign Restructuring Program
On January 13, 2011, the Board of Directors approved a 2011 manufacturing redesign restructuring program of up to
$55 million to rationalize certain product lines and discontinue tape coating operations at our Weatherford, Oklahoma
facility by April 2011 and subsequently close the facility. We signed a strategic agreement with TDK to jointly develop and
manufacture magnetic tape technologies. Under the agreement, we will collaborate on the research and development of
future tape formats in both companies’ research centers in the U.S. and Japan, while consolidating tape coating operations
to the TDK Group Yamanashi manufacturing facility.
During 2010 we recorded severance and related expenses of $3.2 million and non-cash asset impairment charges of
$31.2 million, primarily related to the Weatherford facility. We also recorded non-cash inventory write-offs of $14.2 million
related to this program, which is included in cost of goods sold on our Consolidated Statements of Operations.
Approximately $2 million of other costs will be recorded in 2011 as incurred.
2011 Corporate Strategy Restructuring Program
On January 31, 2011, the Board of Directors approved the 2011 corporate strategy restructuring program to
rationalize certain product lines and increase efficiency and gain greater focus in support of our go-forward strategy. Major
components of the program include charges associated with certain benefit plans, improvements to our global sourcing
and distribution network and costs associated with both further rationalization of our product lines as well as evolving skill
sets to align with our new strategy.
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