Memorex 2007 Annual Report Download - page 93

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TDK Recording Media Restructuring Costs
During the third and fourth quarter of 2007, we recorded severance and other charges of $11.7 million, as we
reorganized in conjunction with the TDK Recording Media acquisition and integration. We recorded $9.4 million of these
amounts as adjustments to goodwill in accordance with EITF 95-3, Recognition of Liabilities in Connection with a Purchase
Business Combination (EITF 95-3). The remaining $2.3 million of restructuring costs related to Imation operations and
were reflected in our Consolidated Statements of Operations as restructuring and other expense. The following tables
summarize the restructuring activity related to the TDK Recording Media restructuring program.
Initial
Program
Amounts
Cumulative
Usage
Liability as of
December 31,
2007
(In millions)
Severance and other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11.7 $(2.3) $9.4
Initial
Headcount
Amounts
Cumulative
Reductions
Balance as of
December 31,
2007
Total employees affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 (97) 75
2006 Imation and Memorex Restructuring Program
Severance, severance related costs and lease termination costs. During the first quarter of 2007 we recorded lease
termination costs of $0.4 million related to our 2006 Imation and Memorex restructuring program, which began in the
second quarter of 2006. The 2006 Imation and Memorex restructuring program was substantially completed as of June 30,
2007.
2006 Activity
Severance, severance related costs and lease termination costs. During the first quarter of 2006, we recorded
severance and severance related charges of $1.8 million. The charges related to employee reductions in our Wahpeton,
North Dakota and Camarillo, California production facilities and consisted of estimated severance payments and related
benefits associated with the elimination of approximately 100 positions. This program was substantially completed as of
June 30, 2006.
During the second quarter of 2006, we recorded $6.8 million of severance and severance related expense. These
charges, as well as $1.4 million related to lease termination costs, were associated with historical Imation operations and
were reflected in our Consolidated Statements of Operations for the year ended December 31, 2006. We also recorded
restructuring accruals totaling $4.9 million as we reorganized in conjunction with the Memorex acquisition and integration,
as well as continued our efforts to simplify structure. These accruals included $4.1 million of severance and other liabilities
and $0.8 million for lease termination costs. Because these amounts were associated with the existing Memorex business,
they were not reflected in our Consolidated Statements of Operations, but were recorded as adjustments to goodwill in
accordance with EITF 95-3.
In the third quarter of 2006, we recorded an additional accrual of $2.5 million for the termination of facility leases
related to the acquired Memorex operations. We also recorded a reduction in the estimate of our severance and severance
related obligations in the amount of $0.2 million. As these amounts were associated with the existing Memorex business,
they were not reflected in our Consolidated Statements of Operations, but were recorded as adjustments to goodwill in
accordance with EITF 95-3.
During the fourth quarter of 2006, we re-evaluated the needs of our 2006 restructuring program and reduced the
severance and severance related liability estimate by $0.5 million. This reduction was reflected in our Consolidated
Statements of Operations for the year ended December 31, 2006. We also recorded an additional $0.2 million accrual for
the termination of facility leases related to the acquired Memorex operations as an adjustment to goodwill in accordance
with EITF 95-3.
64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)