Restructuring Charges:
During 2011, the Company's Board of Directors adopted a restructuring plan to more efficiently implement the Company's product development strategy and to better align the Company's corporate strategy with the Company's sales resources (the “2011 restructuring plan”). In connection with the 2011 restructuring plan, the Company will reduce and refocus its headcount at certain of its research and development facilities, including Pennsylvania and Shanghai, China, and streamline its supply chain activities at its headquarters for reduced operational costs, improved predictability and flexibility. Part of the 2011 restructuring plan includes extending silicon development capabilities and planning and logistics activities by locating personnel in Manila, Philippines. The 2011 restructuring plan was substantially complete at the end of fiscal 2011. A total of approximately $7.1 million was incurred in fiscal 2011 and $0.8 million is expected to be incurred in the first quarter of fiscal 2012.
During fiscal 2009, we initiated a restructuring plan ("2009 restructuring plan") to lower operating expenses primarily by reducing headcount, reducing occupancy in certain leased facilities and to transfer inventory management, order fulfillment, and direct sales logistics from our headquarters in Oregon to a third party contractor in Singapore. In addition, the Company established an operations center in Singapore to transfer some of its supply chain activities from the Company’s headquarters in Oregon. As part of the 2011 restructuring plan, we updated our estimate of the remaining severance and lease loss reserve for the 2009 restructuring plan. This resulted in a credit to Restructuring charges in the first quarter of fiscal 2011 of $0.8 million, primarily for re-occupying certain leased facilities.
During the third quarter of fiscal 2008, we initiated a restructuring plan (“2008 restructuring plan”) to better align operating expenses with near-term revenue expectations, primarily by reducing headcount. The 2008 restructuring plan was substantially complete by the end of fiscal 2008. During the third quarter of fiscal 2007, we approved and initiated a restructuring plan to lower operating expenses primarily by reducing headcount. This plan encompassed a reduction in work force, a voluntary separation program for certain employees and the closure of certain leased facilities. During the fourth quarter of fiscal 2005, we initiated and completed a restructuring plan (“2005 restructuring plan”) to reduce operating expenses. The 2005 restructuring plan encompassed three major components - a streamlining of research and development sites, a voluntary separation program for certain employees and an organizational consolidation within the Company's largest design center.
At December 31, 2011, the Consolidated Balance Sheet included $1.6 million primarily related to severance and related expenses accrued under the provisions of the 2011 restructuring plan.
The following table displays the activity related to all of the plans described above (in thousands):
|
| | | | | | | | | | | | | | | | | | | | |
| Balance at
January 1,
2011 | | Charged to
expense in
fiscal 2011 | | Paid or
settled | | Adjustments
to reserve credited to expense in fiscal 2011 | | Balance at
December 31,
2011 | |
2011 Restructuring Plan: | | | | | | | | | | |
Severance and related costs | $ | — |
| | $ | 6,503 |
| | $ | (4,678 | ) | | $ | (269 | ) | | $ | 1,556 |
| |
Other | — |
| | 830 |
| | (830 | ) | | — |
| | — |
| |
Subtotal | — |
| | 7,333 |
| | (5,508 | ) | | (269 | ) | | 1,556 |
| |
| | | | | | | | | | |
Pre-2011 Restructuring Plans: | | | | | | | | | | |
Severance and related costs | 175 |
| | — |
| | — |
| | (175 | ) | | — |
| |
Lease loss reserve and other | 1,027 |
| | 11 |
| | (191 | ) | | (821 | ) | | 26 |
| |
Total restructuring plans | $ | 1,202 |
| | $ | 7,344 |
| | $ | (5,699 | ) | | $ | (1,265 | ) | | $ | 1,582 |
| |
Total restructuring charges in fiscal years 2011, 2010 and 2009 were as follows (in thousands):
|
| | | | | | | | | | | |
| Year Ended |
| December 31,
2011 | | January 1,
2011 | | January 2,
2010 |
Severance and related costs | $ | 6,059 |
| | $ | (97 | ) | | $ | 2,334 |
|
Lease loss reserve | 20 |
| | 108 |
| | 1,358 |
|
Other | — |
| | — |
| | (3 | ) |
| $ | 6,079 |
| | $ | 11 |
| | $ | 3,689 |
|
We cannot be certain as to the actual amount of any remaining restructuring charges or the timing of their recognition for financial reporting purposes.
