Western Digital 2000 Annual Report Download - page 60

WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Following is a summary of the 1999 restructuring charges, the amounts paid and the ending accrual
balances (in thousands) for the years ended July 3, 1999 and June 30, 2000:
Non-Cash Total
Accruals Charges Charges
Consolidation of hard drive divisions:
Write-down of building and equipment to fair value ÏÏÏÏÏÏ $ Ì $19,642 $19,642
Write-oÅ of duplicate warranty repair and engineering
supplies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 5,748 5,748
Severance and other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14,271 Ì 14,271
Tuas facility renovation and related costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,339 Ì 1,339
15,610 25,390 41,000
Sale of media assets to Komag:
Assets sold or written oÅ, net of proceeds received ÏÏÏÏÏÏÏ Ì 16,996 16,996
Severance and outplacementÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,004 Ì 3,004
3,004 16,996 20,000
18,614 $42,386 $61,000
1999 cash paymentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (16,668)
Balance at July 3, 1999 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,946
Changes during 2000 to 1999 restructuring actions:
Cash payments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (170)
Accrual reversal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1,776)
Balance at June 30, 2000 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ Ì
The accrual balance at July 3, 1999 after remaining cash obligations paid in 2000, was reversed through
the restructuring charges line item on the consolidated statement of operations in 2000 (see table below).
2000 Restructuring Actions
During the first half of 2000, the Company initiated restructuring actions to improve operational effectiveness
and efficiency and reduce operational expenses worldwide. Charges related to these restructuring actions were
accrued in the periods in which executive management committed to execute such actions. Actions taken in 2000
included reorganization of operational and management responsibilities, transfer of hard drive production from
Singapore to the Company's manufacturing facility in Malaysia, closure of the Company's Singapore operations,
and removal of property and equipment from service. These actions resulted in a net reduction of worldwide
headcount of approximately 1,600, of which approximately 140 were management, professional and administrative
personnel and the remainder were manufacturing employees. In Asia, approximately 3,800 employees were
reduced from the Company's Singapore operation, while employees were added in Malaysia in connection with the
transfer of production. Restructuring charges recorded in connection with these actions totaled $52.6 million and
consisted of severance and outplacement costs of $18.0 million, the write-off of manufacturing equipment and
information systems assets of $28.8 million (taken out of service and held for disposal), and net lease cancellation
and other costs of $5.7 million.
In January 2000, the Company announced plans to exit the enterprise hard drive market and shift its
strategic focus and resources in the enterprise storage market to Internet-related data content management
systems and management software. In connection with this decision, the Company closed its Rochester,
Minnesota enterprise hard drive design center, and approximately 402 employees in the design center were
laid oÅ and given legally required notiÑcation and outplacement services. The Company sold its Rochester,
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