3Ware 2002 Annual Report Download - page 64

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APPLIED MICRO CIRCUITS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
activities. It requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and
measure those instruments at fair value. The adoption of this standard in fiscal 2002 did not have an impact on
the Company’s consolidated financial statements.
Reclassification
Certain prior period amounts have been reclassified to conform to the current period presentation.
2. Restructuring Costs
As a result of industry conditions, the Company announced a restructuring plan in July 2001. The plan
included reducing the overall cost structure of the Company and aligning manufacturing capacity with demand.
Restructuring costs of $11.6 million were recognized in the fiscal year ended March 31, 2002.
The restructuring plan was comprised of the following components:
Workforce reduction—The Company has implemented its workforce reduction plan, which resulted in
a workforce reduction charge of approximately $900,000. The charges primarily related to severance and
benefits for terminated employees.
Consolidation of excess facilities—As a result of the Company’s acquisitions and significant internal
growth in fiscal 2001, the Company expanded its number of locations throughout the world. In an effort to
improve the efficiency of the workforce and reduce the Company’s cost structure, the Company has
consolidated its workforce into certain designated facilities. As a result, a charge of approximately
$2.0 million was recognized, primarily relating to non-cancelable lease commitments.
Property and equipment impairments—During fiscal 2000 and 2001, the Company aggressively
expanded its manufacturing capacity in order to meet demand. As a result of the sharp decrease in demand
in fiscal 2002, the Company recorded a charge of approximately $5.6 million for the elimination of certain
excess manufacturing equipment related to its older process technologies. In addition, the Company
recorded a charge of approximately $3.1 million relating to the abandonment of certain leasehold
improvements and software licenses in connection with the restructuring plan.
A summary of the restructuring costs for the fiscal year ended March 31, 2002 is as follows (in thousands):
Total Costs
Noncash
Charges
Cash
Payments
Liability,
March 31,
2002
Workforce reduction .............................. $ 900 $ — $ (898) $ 2
Consolidation of excess facilities ..................... 1,950 — (600) 1,350
Property and equipment impairments ................. 8,727 (8,727) — —
Total restructuring costs ........................ $11,577 $(8,727) $(1,498) $1,352
Amounts related to the consolidation of facilities will be paid over the respective lease terms through fiscal
2005. The Company’s estimated costs to exit these facilities were based on available commercial rates and an
estimate of the time required to sublet the facilities. The actual loss incurred in exiting these facilities may differ
from the Company’s estimates.
F-11