3Ware 2003 Annual Report Download - page 67

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APPLIED MICRO CIRCUITS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2. Restructuring Charges
Due to the prolonged downturn in the industry, the Company has announced a total of three restructuring
programs between July 2001 and April 2003. A summary of each of the separate programs is as follows:
• The July 2001 program consisted of a 5% workforce reduction, consolidation of excess facilities and
property and equipment impairments of approximately $8.7 million ($5.6 million for the elimination of
certain excess manufacturing equipment and $3.1 million for the abandonment of leasehold
improvements and software licenses). Payments for the workforce reduction were approximately
$900,000 and were completed in fiscal 2002. Amounts related to the consolidation of facilities will
be paid over the respective lease terms through fiscal 2005 and are estimated to be approximately
$2.0 million. The program resulted in total charges of $11.6 million that are reflected as an operating
expense in fiscal 2002.
• The July 2002 program included the closure of the internal wafer manufacturing facility and a global
workforce reduction. The estimate for the closure of the manufacturing facility is approximately
$4.0 million and is comprised of severance packages for the manufacturing workforce, facility
restoration costs and fixed asset disposals. The payments for these costs are expected to be complete by
the end of the first quarter of fiscal 2004. The global workforce reduction also included the closing of a
design center and disposal of related assets, and resulted in a charge of $3.0 million. Payments for
employee severance were made in fiscal 2003; amounts for the facility closure will be paid through the
end of the related lease term in fiscal 2004.
• In April 2003, the Company announced its third restructuring program, consisting of a workforce
reduction, further consolidation of excess facilities and additional fixed asset writeoffs. In June 2002,
the FASB issued SFAS 146 requiring that costs associated with exit or disposal activities be recognized
when they are incurred rather than at the date of a commitment to an exit or disposal plan. Total costs
related to the restructuring plan are expected to be $20 million to $25 million and will be substantially
recognized in the first quarter of fiscal 2004, in accordance with the new guidance. In the year ended
March 31, 2003, the Company recorded approximately $300,000 as a liability for certain severance
packages communicated to employees in March 2003.
A combined summary of the restructuring programs is as follows (in thousands):
Workforce
Reduction
Facilities
Consolidation
Property and
Equipment
Impairments Total
Charged to expense .................................. $ 900 $1,950 $ 8,727 $11,577
Noncash amounts .................................... — — (8,727) (8,727)
Cash payments ...................................... (898) (600) — (1,498)
Liability, March 31, 2002 ......................... 2 1,350 — 1,352
Charged to expense .................................. 5,041 1,195 1,014 7,250
Noncash amounts .................................... — — (45) (45)
Cash payments ...................................... (2,864) (1,161) — (4,025)
Liability, March 31, 2003 ......................... $2,179 $ 1,384 $ 969 $ 4,532
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