Circuit City 2006 Annual Report Download - page 44

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--- -----
Pro forma net income $11,173 $9,779
======= ======
Basic net income per common share:
Net income - as reported $.33 $ .30
==== =====
Net income - pro forma $.32 $ .28
==== =====
Diluted net income per common share:
Net income - as reported $.31 $ .29
==== =====
Net income - pro forma $.31 $ .28
==== =====
2005 2004
---- ----
Expected dividend yield 0% 0%
Risk-free interest rate 4.5% 5.5%
Expected volatility 79.0% 46.0%
Expected life in years 5.20 2.36
Years ended December 31, 2005 2004
------------------------ ---- ----
2004 United States streamlining plan $- $3,743
2003 United States warehouse consolidation plan 122 642
2002 United Kingdom consolidation plan (93) 467
Litigation settlements (recoveries) 300
Other severance and exit costs 3,822 2,504
----- -----
Total restructuring and other charges $4,151 $7,356
====== ======
The fair value of options granted was estimated on the date of grant using the Black-Scholes option-pricing model with
the following assumptions:
The weighted average remaining contractual life of the stock options outstanding was 6.7 years at December 31, 2005
and 7.4 years at December 31, 2004.
9.
RESTRUCTURING AND OTHER CHARGES
The Company periodically assesses its operations to ensure that they are efficient, aligned with market conditions and
responsive to customer needs. During the years ended December 31, 2005, and 2004, management approved and
implemented restructuring actions which included workforce reductions and facility consolidations. The following
table summarizes the amounts recognized by the Company as restructuring and other charges for the periods presented
(in thousands):
2004 United States Streamlining Plan
In the first quarter of 2004, the Company implemented a plan to streamline the back office and warehousing operations
in its United States computer businesses. The Company recorded $3.8 million of costs related to this plan, including
$3.2 million for severance and benefits for approximately 200 terminated employees and $483,000 of non-cash costs
for impairment of the carrying value of fixed assets.
2003 United States Warehouse Consolidation Plan
In the fourth quarter of 2003, the Company implemented a plan to consolidate the warehousing facilities in its United
States computer supplies business. The Company recorded $122,000 of additional severance costs in 2005 and
$642,000 of additional exit costs in 2004 related to this plan.
2002 United Kingdom Consolidation Plan
In 2002 the Company implemented a restructuring plan to consolidate the activities of three United Kingdom locations
into a new facility constructed for the Company. During the year ended December 31, 2004, the Company recorded
$467,000 of additional exit costs related to this plan.