Western Digital 2001 Annual Report Download - page 64

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Following is a summary of the 1999 restructuring charges, the amounts paid and the ending accrual
balances (in thousands) for the years ended July 3, 1999 and June 30, 2000:
Non-Cash Total
Accruals Charges Charges
Consolidation of hard drive divisions:
Write-down of building and equipment to fair value ÏÏÏÏÏÏ $ Ì $19,642 $19,642
Write-oÅ of duplicate warranty repair and engineering
supplies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 5,748 5,748
Severance and other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14,271 Ì 14,271
Tuas facility renovation and related costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,339 Ì 1,339
15,610 25,390 41,000
Sale of media assets to Komag:
Assets sold or written oÅ, net of proceeds received ÏÏÏÏÏÏÏ Ì 16,996 16,996
Severance and outplacementÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,004 Ì 3,004
3,004 16,996 20,000
18,614 $42,386 $61,000
1999 cash paymentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (16,668)
Balance at July 3, 1999 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,946
Changes during 2000 to 1999 restructuring actions:
Cash payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (170)
Accrual reversal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1,776)
Balance at June 30, 2000 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ Ì
The accrual balance at July 3, 1999 after remaining cash obligations paid in 2000, was reversed through
the restructuring charges line item on the consolidated statement of operations in 2000 (see table below).
2000 Restructuring Actions
During 2000, the Company initiated restructuring actions to improve operational eÇciency and reduce
operating expenses. Charges related to these restructuring actions were accrued in the periods in which
executive management committed to execute such actions. The restructuring actions taken in 2000 included
the reorganization of worldwide operational and management responsibilities, transfer of hard drive production
from Singapore to the Company's manufacturing facility in Malaysia, removal of property and equipment
from service, closure of the Company's Singapore operations and closure of its Rochester, Minnesota design
center. These actions resulted in a net reduction of worldwide headcount of approximately 2,000, of which
approximately 540 were management, professional and administrative personnel and the remainder were
manufacturing employees. These employees were given legally required notiÑcation and outplacement
services. Restructuring charges recorded in connection with these actions totaled $85.8 million and consisted
of severance and outplacement costs of $28.7 million, the write-oÅ of manufacturing equipment and
information systems assets of $56.3 million (taken out of service and held for disposal), including a loss
recognized on the sale of the Rochester facility of $1.9 million (sold for cash proceeds of approximately
$29.7 million), and net lease cancellation and other costs associated with the closure of $11.0 million.
Reducing these charges was the favorable settlement of lease commitments in Singapore of $5.3 million,
favorable settlement of 1999 restructuring accruals of $1.8 million and a gain realized on the sale of the Tuas
facility of $3.1 million. The restructuring eÅort was substantially completed by June 30, 2000. Of the charges,
approximately $30.5 million was paid in 2000 and the remainder was paid in 2001.
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