Adaptec 2008 Annual Report Download - page 35

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In 2008, we recorded a net addition accrual of $0.1 million for our excess facilities, as the original
assumptions regarding possible sublease of the exited facilities were not realized, and made payments of $0.5
million related to the 2006 plan.
To date, we have made payments relating to these activities of $4.4 million. As of December 28, 2008, all
severance costs have been paid. Payments related to the excess facilities will extend to 2010.
2005
During 2005, we completed various restructuring activities aimed at streamlining production and reducing
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 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.
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. In 2008, we recorded an additional accrual for excess facilities of
$1.1 million, as the original assumptions regarding possible sublease of the exited facilities were not realized,
and made payments of $1.4 million related to the 2005 plan.
To date, we have made payments relating to these activities of $13.4 million. As of December 28, 2008, 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 the 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 Statement of Financial Accounting Standard No. 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 that have been cancelled
or that are no longer being used. In 2006, we reversed $2.3 million of this restructuring accrual because certain
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