Adaptec 2007 Annual Report Download - page 87

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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. PMC continued to
rationalize costs in the fourth quarter of 2007 by reducing headcount by 18 employees primarily at the 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, the Company closed its 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. The Company also eliminated 10 positions from research and development in the
Company’s 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 the Company reduced its estimated severance accrual by $0.3 million and its accrual for excess facilities by $0.4 million as the
Company fulfilled a portion of these obligations. The Company has 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, the Company completed various restructuring activities aimed at streamlining production and reducing operating expenses. In the first quarter of
2005, the Company 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, the company 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, the Company consolidated 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, the Company 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, the Company
81
Source: PMC SIERRA INC, 10-K, February 22, 2008