Adaptec 2008 Annual Report Download - page 40

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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 $155.0 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 and net operating losses, if any,
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 estimates and interpretations of
those regulations for the countries we operate in. However, our estimates are subject to review and assessment by
the tax authorities and the courts of those countries. For example, our estimated tax provision rate decreased
significantly at the end of 2008 due to one of the Company’s foreign subsidiaries settling several ongoing tax
matters for tax years 2000-2006. As a result, we recognized tax benefits of $124.1 million that was previously
included in the liability for unrecognized tax benefits. The timing of any such review and final assessment of our
liabilities by local authorities is substantially out of our control and is dependent on the actions by those
authorities in the countries we operate in. Any re-assessment of our tax liabilities by tax authorities may result in
adjustments of the income taxes we pay or refunds that are due to us.
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