Adaptec 2008 Annual Report Download - page 34

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Severance costs
(in thousands) 2007 2006 2005 2003 2001 Total
Balance at December 31, 2005 ................. $ — $ — $ 485 $— $— $ 485
Reversals and adjustments .................... — — (350) — — (350)
New charges ............................... — 2,968 1,562 — — 4,530
Cash payments ............................. — (2,432) (1,600) — — (4,032)
Balance at December 31, 2006 ................. — 536 97 — — 633
Reversals and adjustments .................... 144 (409) (59) — — (324)
New charges ............................... 9,863 — — — — 9,863
Cash payments ............................. (8,889) (127) (38) — — (9,054)
Balance at December 30, 2007 ................. 1,118 — — — — 1,118
Reversals and adjustments .................... (378) — — — — (378)
New charges ............................... 696 — — — — 696
Cash payments ............................. (1,429) — — — — (1,429)
Balance at December 28, 2008 ................. $ 7 $ — $ — $— $— $ 7
2007
In the first quarter of 2007, we 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. We also vacated excess office space at our 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.
In 2008, we recorded a net reduction of our accrual for excess facilities by $0.2 million, as we fulfilled a
portion of these obligations and made payments of $0.9 million related to the 2007 plan. To date, we have
incurred $10.3 million in termination and relocation costs, $2.6 million for excess facilities and contract
termination cost and $2.6 million in asset impairment charges.
We have made payments of $12.1 million in connection with this plan. As of December 30, 2008, $7
thousand in severance costs remained to be paid and payments related to the excess facilities may extend until
2011.
We initially expected to save approximately $16 million in payroll-related costs on an annualized basis. We
achieved the prorated portion of these expected cost savings in 2008. We continued to contain costs in
accordance with our 2007 restructuring plan, however, we also initiated new R&D programs in 2008 which
resulted in increases in payroll-related costs of approximately $4.9 million that partially offset the cost savings
anticipated by the 2007 restructuring plan.
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 ten 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.
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