Adaptec 2007 Annual Report Download - page 47

Table of Contents
In the first quarter of 2006, we continued the workforce reduction plans initiated in 2005 and recorded $1.6 million in restructuring charges related to the
termination of 19 employees, primarily from research and development, in the Santa Clara facility. During the third quarter of 2006 we reduced our estimated
severance accrual related to the 2005 workforce reduction activities by $0.4 million, and increased the accrual for excess facilities related to the 2005
restructuring by $0.8 million. We further increased our accrual for excess facilities by $0.5 million in the fourth quarter of 2007. To date, we have made
payments relating to these activities of $12.0 million. As of December 30, 2007, all severance costs have been paid. Payments related to the excess facilities will
extend to 2011.
2003 and 2001
In 2003 and 2001, we implemented three restructuring plans aimed at focusing development efforts on key projects and reducing operating costs in response to
the severe and prolonged economic downturn in the semiconductor industry. Our assessment of the market demand for our products, and the development efforts
necessary to meet this demand, were key factors in our decisions to implement these restructuring plans. As end markets for our products had contracted, certain
projects were curtailed in an effort to cut costs. Cost reductions in all other functional areas were also implemented, as fewer resources were required to support
the reduced level of development and sales activities during these periods.
The January 2003 restructuring included the termination of 175 employees and the closure of design centers in Maryland, Ireland and India, and vacating office
space in the Santa Clara facility. To date, we have recorded restructuring charges of $18.3 million in accordance with SFAS 146, “Accounting for Costs
Associated with Exit or Disposal Activities”, including $1.5 million for asset write-downs. 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. We have
disposed of the property improvements and computer equipment, and software licenses have been cancelled or are no longer being used. In 2006, we reversed
$2.3 million of our restructuring accrual because certain floors in the Santa Clara facility that had been vacated in 2003 were re-occupied in 2006 due to the
addition of personnel that occurred with the acquisition of the Storage Semiconductor Business. We reversed a further $0.5 million in 2007 as we completed a
portion of our lease obligation at this site.
The October 2001 restructuring plan included the termination of 341 employees, the consolidation of excess facilities, and the curtailment of certain research and
development projects, resulting in a restructuring charge of $175.3 million, including $12.2 million of asset write-downs. Due to the continued downturn in real
estate markets, we recorded additional provisions for abandoned office facilities of $1.3 million in the fourth quarter of 2004.
In the first quarter of 2001, we recorded a charge of $19.9 million for a restructuring plan that included the termination of 223 employees across all business
functions, the consolidation of a number of facilities and the curtailment of certain research and development projects. Due to the continued downturn in real
estate markets, we recorded additional provisions for abandoned office facilities of $2.2 million in the fourth quarter of 2004, $0.8 million in the third quarter of
2006, and $0.9 million in the fourth quarter of 2007.
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Source: PMC SIERRA INC, 10-K, February 22, 2008