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reselling it for $33 million. PMC incurred fees of approximately $1 million on these transactions. Upon completion of the sale of
Mission Towers Two, PMC reversed $4.5 million of excess restructure provision. The remainder of cash payments made in 2003 and
the remaining accrual at December 31, 2003 relate to other facilities abandoned in the October 2001 restructuring. While we continue
our efforts to exit the remaining sites, payments relating to these facilities could extend to 2009.
Restructuring – January 16, 2003
As a result of the prolonged economic downturn in the semiconductor industry, the Company implemented another corporate
restructuring aimed at further reducing operating expenses in the first quarter of 2003. The restructuring included the termination of
approximately 175 employees and the closure of design centers in Maryland, Ireland and India. To date, PMC has recorded
restructuring charges of $18.3 million in accordance with SFAS 146, “Accounting for Costs Associated with Exit or Disposal
Activities”. These charges related to workforce reduction, lease and contract settlement costs and the write−down of certain property,
equipment and software assets whose value was impaired as a result of this restructuring plan. To date, the Company has made cash
payments of $9.3 million under this plan.
Activity in this restructuring accrual during fiscal 2003 was as follows:
(in thousands) Workforce
Reduction
Facility Lease
and Contract
Settlement
Costs Asset
Writedowns Total
Total charge − January 16, 2003 $ 6,384 $ 260 $ — $ 6,644
Additional charges 812 9,349 1,491 11,652
Noncash charges — — (1,491) (1,491)
Adjustments (732) — — (732)
Cash payments (6,064) (3,270) — (9,334)
Balance at December 31, 2003 $ 400 $ 6,339 $ — $ 6,739
Impairment of Goodwill and Intangible Assets
During the second quarter of 2001, PMC recognized impairment related to three acquisitions completed in 2000. Market opportunities
for one of the products acquired were drastically reduced as our customers eliminated development programs that would use this
product as a reaction to the severe reduction in capital spending by service providers. The reduced market opportunities made further
development of this particular product uneconomic. Accordingly, the Company recorded an impairment charge of $189 million, equal
to the remaining net book value of goodwill and intangible assets related to this acquisition.
In the fourth quarter of 2001, brought on by a continued decline in market conditions and a delay in introduction of certain products to
the market, the Company completed an assessment of the future revenue potential and estimated costs associated with all acquired
technologies. As a result of this review, the Company recorded a further impairment charge of $80.8 million related to the acquired
goodwill and other intangibles recognized in the two subsequent acquisitions completed in 2000. The Company recorded a charge of
$79.3 million, measured as
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