Adaptec 2008 Annual Report Download - page 74

2003 and 2001
In 2003 and 2001, the Company 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. PMC’s assessment of the market demand for its 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 the Company’s 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, PMC has 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. PMC has
disposed of the property improvements and computer equipment, and software licenses have been cancelled or
are no longer being used. In 2006, the Company reversed $2.3 million of this restructuring accrual because
certain floors in the Santa Clara facility that had been vacated in 2003 were re-occupied in 2006 due to the
addition of personnel that occurred with the acquisition of the Storage Semiconductor Business. The Company
reversed a further $0.5 million in 2007, as it completed a portion of the lease obligation at this site.
The October 2001 restructuring plan included the termination of 341 employees, the consolidation of excess
facilities, and the curtailment of certain research and development projects, resulting in a restructuring charge of
$175.3 million, including $12.2 million of asset write-downs. Due to the continued downturn in real estate
markets, the Company recorded additional provisions for abandoned office facilities of $1.3 million in the fourth
quarter of 2004.
In the first quarter of 2001, PMC recorded a charge of $19.9 million for a restructuring plan that included
the termination of 223 employees across all business functions, the consolidation of a number of facilities and the
curtailment of certain research and development projects. Due to the continued downturn in real estate markets,
the Company recorded additional provisions for abandoned office facilities of $2.2 million in the fourth quarter
of 2004, $0.8 million in the third quarter of 2006, and $0.9 million in the fourth quarter of 2007. In 2008, the
Company recorded a net reduction of its accrual for excess facilities of $0.7 million, as the Company fulfilled a
portion of these obligations, and made payments of $1.3 million related to the 2001 plan.
To date, PMC has made cash payments of $12.7 million and $178.0 million related to the 2003 and 2001
plans, respectively. The Company has completed the activities contemplated in these restructuring plans, but has
not yet terminated the leases on all of its surplus facilities. Efforts to exit these sites are ongoing, but the
payments related to these facilities could extend to 2011.
NOTE 7. Investment securities
At December 28, 2008, the Company had investments in money market funds of $278.9 million (2007—
$323.8 million), comprised of bank notes, commercial paper, certificates of deposit and floating rate notes.
The short-term investments of $209.7 million held at December 28, 2008 relate to shares of the Reserve
International Liquidity Fund, Ltd. (the “International Fund”) and the Reserve Primary Fund (the “Primary Fund”,
together the “Reserve Funds”) for which the Company has outstanding redemption orders. The Reserve Funds
were AAA-rated money market funds which announced redemption delays and suspended trading in September
2008, during the severe disruption in financial markets. The Reserve Funds are in the process of liquidating their
portfolio of investments, which included securities of Lehman Brothers Holdings, Inc. (“Lehman Brothers”)
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