Memorex 2009 Annual Report Download - page 30

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This program is aligning our cost structure with our strategic direction by reducing SG&A expenses. We are reducing costs
by rationalizing key accounts and products and by simplifying our corporate structure globally. We anticipated incurring up
to $40 million in restructuring and other charges globally, mainly through cash payments for severance and severance
related costs. The majority of the program is complete with approximately $35 million worth of cumulative costs incurred
through December 31, 2009. As of December 31, 2009, we estimate approximately 59 more positions will be eliminated
throughout the world during 2010.
During 2009, we also recorded $0.9 million of lease termination costs related to our 2008 cost reduction restructuring
program. This program began in the third quarter of 2008 when our Board of Directors approved the Camarillo, California
restructuring plan as further implementation of our manufacturing strategy. In order to partially mitigate projected declines
in tape gross profits in future years, we ended manufacturing at our Camarillo plant and exited the facility during 2008. We
have focused our manufacturing efforts on magnetic tape coating operations at our existing plant in Weatherford,
Oklahoma.
The 2008 cost reduction restructuring program also included our decision to consolidate the Cerritos, California
business operations into Oakdale, Minnesota. During 2009, we consolidated the previous Cerritos activities into a single
headquarters location in order to achieve better focus, gain efficiencies across brands and channels and reduce cost.
During 2009, we recorded $0.3 million of income through the reversal of lease termination accruals related to
previously announced programs.
We recorded pension settlement and curtailment losses of $11.7 million, $5.7 million and $1.4 million in 2009, 2008
and 2007, respectively, within restructuring and other expense in the Consolidated Statements of Operations, mainly as a
result of the reorganizations associated with our restructuring activities. See Note 10 to the Consolidated Financial
Statements for further information regarding pension settlements and curtailments.
We incurred net asset impairment charges of $2.7 million, $5.0 million and $8.4 million in 2009, 2008 and 2007,
respectively, related mainly to the abandonment of certain manufacturing and R&D assets as a result of the reorganizations
associated with our restructuring activities.
During 2008, we recorded $4.9 million and $0.5 million of severance and severance related expenses and lease
termination costs, respectively, related to our 2008 corporate redesign restructuring program. We recorded $5.2 million and
$0.2 million of severance and severance related expenses and lease termination costs, respectively, related to our 2008
cost reduction restructuring program. We recorded $5.3 million for severance and severance related expenses under our
TDK Recording Media and 2007 cost reduction restructuring programs, which began in 2007. We also recorded $1.8 million
of lease termination costs related to these programs in 2008. We recorded $0.3 million and $2.3 million of severance and
severance related expenses and lease termination costs, respectively, related to our 2006 Imation and Memorex
restructuring program, which began in the second quarter of 2006.
We recorded a $2.3 million TDK post-closing purchase price adjustment in 2008 associated with the finalization of
certain acquisition-related working capital amounts as negotiated with TDK. See Note 3 to the Consolidated Financial
Statements for further information.
During 2007, we recorded severance and severance related expenses of $21.5 million and $2.3 million under our
2007 cost reduction and TDK Recording Media restructuring programs, respectively. During 2007, we recorded $0.4 million
and $0.2 million of lease termination costs related to our 2007 cost reduction and 2006 Imation and Memorex restructuring
programs, respectively.
See Note 8 to the Consolidated Financial Statements for further information regarding our various restructuring
programs and other expenses.
Operating (Loss) Income
2009 2008 2007 2009 vs. 2008 2008 vs. 2007
Years Ended December 31, Percent Change
(In millions)
Operating (loss) income. . . . . . . . . . . . . . . . . . . . . . . . . . . $ (61.7) $ (33.7) $(38.7) 83.1% ⫺12.9%
As a percent of revenue . . . . . . . . . . . . . . . . . . . . . . . . ⫺3.7% ⫺1.7% ⫺2.0%
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