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Restructuring Costs
12 Months Ended
Dec. 31, 2015
Restructuring And Related Activities [Abstract]  
Restructuring Costs

7. Restructuring Costs

In 2015, 2014, and 2013, the Company recorded $11.1 million, $40.3 million, and $48.5 million, respectively, related to restructuring actions that included the elimination or relocation of various positions and the consolidation and elimination of certain facilities. These actions are generally intended to streamline and focus the Company’s efforts and more properly align the Company’s cost structure with its projected future revenue streams.

The following table summarizes the activity of the Company’s restructuring reserves (in thousands):

 

 

 

Severance/Other

 

 

Facilities

 

 

Other

 

 

Total

 

Balance at December 31, 2012

 

$

1,362

 

 

$

7,464

 

 

$

 

 

$

8,826

 

Additions to the reserve, net

 

 

10,185

 

 

 

36,770

 

 

 

2,880

 

 

 

49,835

 

Interest accretion

 

 

 

 

 

1,461

 

 

 

 

 

 

1,461

 

Non-cash adjustments

 

 

 

 

 

(3,547

)

 

 

 

 

 

(3,547

)

Cash payments

 

 

(10,404

)

 

 

(8,362

)

 

 

(2,880

)

 

 

(21,646

)

Balance at December 31, 2013

 

 

1,143

 

 

 

33,786

 

 

 

 

 

 

34,929

 

Additions to the reserve, net

 

 

11,755

 

 

 

28,524

 

 

 

 

 

 

40,279

 

Interest accretion

 

 

 

 

 

2,347

 

 

 

 

 

 

2,347

 

Non-cash adjustments

 

 

 

 

 

(4,855

)

 

 

 

 

 

(4,855

)

Cash payments

 

 

(12,234

)

 

 

(18,893

)

 

 

 

 

 

(31,127

)

Balance at December 31, 2014

 

 

664

 

 

 

40,909

 

 

 

 

 

 

41,573

 

Additions to the reserve, net

 

 

13,999

 

 

 

(5,268

)

 

 

801

 

 

 

9,532

 

Interest accretion

 

 

 

 

 

1,564

 

 

 

 

 

 

1,564

 

Non-cash adjustments

 

 

 

 

 

(696

)

 

 

 

 

 

(696

)

Cash payments

 

 

(6,591

)

 

 

(18,054

)

 

 

 

 

 

(24,645

)

Balance at December  31, 2015

 

$

8,072

 

 

$

18,455

 

 

$

801

 

 

$

27,328

 

 

During 2015, management initiated the reduction or elimination of certain leased facilities and the elimination of approximately 11 percent of the Company’s global workforce which is expected to be substantially complete by the third quarter of 2016. These actions were designed to improve its profitability by strategically investing in more accretive areas of the business and further leveraging its outsource partners, pursuant to the announcement in December 2015. As a result, in the fourth quarter of 2015, the Company recorded approximately $9.4 million of charges for severance and other one-time employee benefits for the individuals impacted.  The restructuring charges in 2015 also include approximately $4.6 million for severance payments for certain employees and approximately $2.7 million for facilities-related charges as part of discrete follow-on actions to previous restructuring actions, and adjustments of approximately $8.0 million related to a change in assumptions used in our facilities-related restructuring reserves estimate. Additions to the reserve include $1.6 million of deferred rent that was expensed in prior periods.

During 2014, management completed the reduction or elimination of certain leased facilities and the elimination of approximately six percent of the Company’s global workforce. These actions were designed to better align expenses to the Company’s revenue and gross margin profile, and position the Company for improved operating performance, pursuant to the announcement in January 2014. As a result, the Company recorded approximately $28.6 million in restructuring charges related to idle facilities upon vacating these facilities. Additions to the reserve include $2.3 million of deferred rent that was expensed in prior periods. Additionally, the Company recorded approximately $11.8 million of restructuring charges related to severance and other employee benefits in 2014.

During 2013, management completed the consolidation and elimination of certain facilities globally and the elimination of approximately four percent of the Company’s global workforce. These actions were generally intended to optimize the organization and manage expenses to gain or improve operating efficiencies and profitability. As a result, the Company recorded approximately $38.2 million in restructuring charges related to idle facilities upon vacating these facilities. Additions to the reserve include $2.8 million of deferred rent that was expensed in prior periods. Additionally, in 2013, the Company recorded approximately $10.2 million of restructuring charges related to severance and other employee benefits, and approximately $2.9 million of other restructuring charges associated with changes to the Company’s product roadmap as it focused on products and solutions with greater revenue and margin potential.  

The Company expects the remaining charges related to these actions to be in the range of $13 million to $16 million, primarily related to its EMEA reportable segment. As of December 31, 2015, the restructuring reserve was primarily comprised of facilities-related liabilities. At the time the reserve is initially set up, the Company calculates the fair value of its facilities-related liabilities based on the discounted future lease payments less sublease assumptions. To the extent that actual sublease income, the timing of subleasing the facility, or the associated cost of, or the recorded liability related to subleasing or terminating the Company’s lease obligations for these facilities is different than initial estimates, the Company adjusts its restructuring reserves in the period during which such information becomes known. This non-recurring fair value measurement is classified as a Level 3 measurement under ASC 820.