Adaptec 2007 Annual Report Download - page 52

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Table of Contents
Restructuring charges - Facilities
In calculating the cost to dispose of our excess facilities we estimate for each location the amount to be paid in lease termination payments, the future lease and
operating costs to be paid until the lease is terminated, and the amount of sublease revenues. This calculation includes an estimate of the timing and costs of each
lease to be terminated, the amount of operating costs for the affected facilities, and the timing and rate at which we might be able to sublease each site. To form
our estimates for these costs we performed an assessment of the affected facilities and considered the current market conditions for each site.
Restructuring activities during the past several years have resulted in facilities charges as follows:
During 2001, we recorded total charges of $155 million for the restructuring of excess facilities as part of restructuring plans implemented that year. The total
remaining estimate of $3.9 million related to the 2001 restructuring plans represents 100% of the estimated total future operating costs and lease obligations for
the affected sites.
In the first quarter of 2003, we announced a further restructuring of our operations, which resulted in the closing of an additional four product development sites
and the recording of $9.6 million charge related to these facilities. During 2006 we reversed $2.3 million of this provision because a portion of the space was
re-occupied. During 2007, we reversed the remaining $0.5 million of this provision as we subleased space and were able to terminate our lease obligations earlier
than we had previously estimated.
In the third quarter of 2005, we recorded charges of $5.3 million for the restructuring of excess facilities in connection with the restructuring plans implemented
in 2005. The total remaining estimate of $3.3 million represents 100% of the estimated total future operating costs and lease obligations for the site.
In the third quarter of 2006, we announced the closure of our development site in Ottawa and recorded total charges of $2.3 million for the restructuring of excess
facilities. During 2007, we reversed $0.4 million of this provision because we subleased a portion of this space earlier than originally anticipated. The total
remaining estimate of $0.6 million represents 100% of the estimated total future operating costs and lease obligations for the site.
In the first quarter of 2007, we recorded charges of $2.8 million related to the closure of our design centers in Saskatoon and Winnipeg, Canada, and exit of a
portion of our Santa Clara facility. The total remaining estimate of $1.9 million represents 100% of the estimated total future operating costs and lease
obligations for the site.
Income Taxes
In estimating our annual effective tax rate we review our forecasted net income for the year by geographic area and apply the appropriate tax rates. We also
consider the income tax credits available in each tax jurisdiction.
Our operations are conducted in a number of countries with complex tax legislation and regulations pertaining to our activities. We have recorded income tax
liabilities based on our
46
Source: PMC SIERRA INC, 10-K, February 22, 2008