Adaptec 2007 Annual Report Download - page 46

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Table of Contents
2007
In the first quarter of 2007, the Company initiated a cost-reduction plan that involved staff reductions of 175 employees at various sites and the closure of design
centers in Saskatoon, Saskatchewan and Winnipeg, Manitoba. The Company also vacated excess office space at its Santa Clara facility. We continued to
rationalize costs in the fourth quarter of 2007 by reducing headcount by 18 employees primarily at our Burnaby facility.
To date, the Company has incurred $9.9 million in termination and relocation costs, $2.8 million for excess facilities and contract termination costs, and $2.5
million in asset impairment charges.
The Company has made payments of $9.7 million in connection with this plan. As of December 30, 2007, $1.1 million in severance costs remained to be paid
and payments related to the excess facilities may extend until 2011.
2006
In the third quarter of 2006, we closed our Ottawa development site in order to reduce operating expenses and the space was vacated by the end of the fourth
quarter of 2006. Approximately 35 positions were eliminated, primarily from research and development, resulting in one-time termination benefit and relocation
costs of $2.2 million, and $2.0 million for excess facilities. We also eliminated 10 positions from research and development in our Portland development site,
resulting in restructuring charges of $1.4 million, comprised of $0.8 million in severance, $0.3 million for excess facilities, $0.1 million for contract termination
and $0.2 million in asset impairment.
During the fourth quarter of 2007 we reduced our estimated severance accrual by $0.3 million and our accrual for excess facilities by $0.4 million as we fulfilled
a portion of these obligations. We have made $3.9 million in payments relating to the 2006 plan. As of December 30, 2007, all severance costs have been paid
and payments related to the excess facilities will extend to 2010.
2005
During 2005, we completed various restructuring activities aimed at streamlining production and reducing our operating expenses. In the first quarter of 2005, we
recorded restructuring charges of $0.9 million in severance costs related to the termination of 24 employees across all business functions. In the second quarter of
2005, we expanded the workforce reduction activities initiated during the first quarter and terminated 63 employees from research and development located in the
Santa Clara facility. In addition, we consolidated our two manufacturing facilities (Santa Clara, California and Burnaby, British Columbia) into one facility
(Burnaby), which involved the termination of 26 employees from production control, quality assurance, and product engineering. As a result, we recorded total
second quarter restructuring charges of $7.6 million, including $6.7 million for termination benefits and a $0.9 million write-down of equipment and software
assets whose value was impaired as a result of these plans. In the third quarter of 2005, we consolidated our facilities and vacated excess office space in the Santa
Clara location, and recorded a restructuring charge of $5.3 million for excess facilities and an additional $0.1 million in severance costs.
40
Source: PMC SIERRA INC, 10-K, February 22, 2008