Adaptec 2009 Annual Report Download - page 74

to the 2005 plan. In 2009, the Company recorded an addition of its accrual for excess facilities by $0.7 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, the Company has made payments relating to these activities of $13.4 million. As of December 27,
2009, all severance costs have been paid. Payments related to the excess facilities will extend to 2011.
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, 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.
In 2007, the Company recorded additional provisions for abandoned office facilities of $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. In 2009, the Company recorded a net reduction of its accrual for excess facilities of $0.1 million, as
the Company fulfilled a portion of these obligations, and made payments of $0.9 million related to the 2001 plan.
To date, PMC has made cash payments of $12.7 million and $178.9 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.
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