Adaptec 2009 Annual Report Download - page 73

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Annual Report
To date, the Company has incurred $10.6 million in termination and relocation costs, $3.0 million for excess
facilities and contract termination costs, and $2.5 million in asset impairment charges.
The Company has made payments of $12.5 million in connection with this plan. As of December 27, 2009,
all severance costs have been paid and payments related to the excess facilities may extend until 2011.
The Company initially expected to save approximately $16 million in payroll-related costs on an annualized
basis. The Company achieved its prorated portion of these expected cost savings in 2007. The Company
continued to contain costs in accordance with its 2007 restructuring plan, however, it 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, 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.
In 2009, the Company recorded an addition of its accrual for excess facilities by $0.1 million, as the original
assumptions regarding possible sublease of the exited facilities were not realized, and made payments of $0.2
million related to the 2006 plan.
To date, the Company has made payments relating to these activities of $4.4 million. As of December 27,
2009, all severance costs have been paid. 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
consolidated its 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, the Company 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.
The Company further increased its accrual for excess facilities by $0.5 million in the fourth quarter of 2007,
as the original assumptions regarding possible sublease of the exited facilities were not realized. In 2008, the
Company 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
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