Memorex 2011 Annual Report Download - page 27

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2011 Manufacturing Redesign Restructuring Program
On January 13, 2011, the Board of Directors approved a 2011 manufacturing redesign restructuring program of up to
$55 million to rationalize certain product lines and discontinue tape coating operations at our Weatherford, Oklahoma facility
by April 2011 and subsequently close the facility. We signed a strategic agreement with TDK to jointly develop and
manufacture magnetic tape technologies. Under the agreement, we are collaborating on the research and development of
future tape formats in both companies’ research centers in the U.S. and Japan and we consolidated tape coating operations
to the TDK Group Yamanashi manufacturing facility. We also recorded additional inventory write-offs related to this program
due to end of life. Since the inception of this program, we have recorded a total of $21.7 million of inventory write-offs, $31.2
million of asset impairment charges, $3.2 million of severance and related expenses, $0.3 million for lease termination and
modification costs and $0.9 million of site clean-up expenses. Therefore this program is substantially complete.
During 2011 we recorded restructuring charges of $0.3 million for lease termination and modification costs and site
clean-up expenses of $0.9 million related to this program. We also recorded inventory write-offs of $7.5 million related to this
program, which are included in cost of goods sold on our Consolidated Statements of Operations.
During 2010 we recorded restructuring charges of $3.2 million for severance and related expenses and $31.2 million of
asset impairment charges primarily related to the Weatherford facility. We also recorded inventory write-offs of $14.2 million
related to this program, which are included in cost of goods sold on our Consolidated Statements of Operations. Although this
program was approved by the Board in 2011, these charges were recorded in 2010 as the charges were probable and we
were able to make a reasonable estimate of the liability.
2011 Corporate Strategy Restructuring Program
On January 31, 2011, the Board of Directors approved the 2011 corporate strategy restructuring program of up to $35
million to rationalize certain product lines and increase efficiency and gain greater focus in support of our go-forward strategy.
Major components of the program include charges associated with certain benefit plans, improvements to our global sourcing
and distribution network and costs associated with both further rationalization of our product lines as well as evolving skill sets
to align with our new strategy. Since the inception of this program, we have recorded a total of $10.4 million of severance and
related expenses, $3.0 million of lease termination and modification costs, $1.6 million of inventory write-offs, $0.2 million of
other charges and $0.3 million related to a pension curtailment charge.
During 2011 we recorded restructuring charges of $7.0 million for severance and related expenses, $3.0 million for lease
termination and modification costs and $0.2 million of other charges. In addition, we also recorded inventory write-offs of $1.6
million related to the planned rationalization of certain product lines as part of this program, which are included in cost of
goods sold in our Consolidated Statements of Operations.
During 2010 we recorded restructuring charges of $3.4 million for severance and related expenses and a pension
curtailment charge of $0.3 million. Although this program was approved by the Board in 2011, these charges were recorded in
2010 as the charges were probable and we were able to make a reasonable estimate of the liability.
Prior Programs Substantially Complete
During 2010, we recorded $6.4 million of severance and related expenses, $1.7 million of lease termination costs, $2.5
million of pension settlement and curtailment charges, and $0.2 million of other charges related to our 2008 corporate
redesign restructuring program. This program was initiated during the fourth quarter of 2008 and aligned our cost structure by
reducing SG&A expenses. We reduced costs by rationalizing key accounts and products and by simplifying our corporate
structure globally.
During 2009, we recorded $11.2 million of severance and related expenses, $0.1 million of lease termination costs and
$11.7 million of pension settlement and curtailment charges related to our 2008 corporate redesign restructuring program.
Additionally during 2009, we 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
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