Note 11. Restructuring costs

3 Months Ended

May 04, 2013

Restructuring and Related Activities Disclosure [Text Block]

11.          Restructuring costs

In fiscal 2013 we initiated a number of targeted actions to address several areas in our business model which resulted in the adoption of company-wide cost saving measures. These actions were intended to align our cost structure with our current business outlook and divest or exit underperforming operations. As a result of the restructuring program, we recognized total restructuring costs of $3.3 million in fiscal 2013.

Pursuant to these restructuring initiatives, during the quarter ended May 4, 2013, we took further actions resulting in the headcount reduction of 17 employees and severance and termination related charges to cost of revenues and operating expenses of $40,000 and $210,000, respectively. Expenses recognized for restructuring activities impacting our operating expenses are presented in the “Restructuring costs” line of the condensed consolidated statements of operations. We will continue assessing further cost-saving measures during the remaining of our fiscal 2014.

The following table summarizes the restructuring costs, outstanding payable balance and cumulative restructuring costs (in thousands):

	Employee Severance			Impairment of Long-Lived Assets			Facility Exit Costs			Total			Cumulative Restructuring Costs
Charges in fiscal 2013	$	2,167		$	1,089		$	8		$	3,264		$	3,264
Cash payments		(1,153	)		-			-			(1,153	)
Non-cash items		-			(1,089	)		-			(1,089	)
Balance at February 2, 2013		1,014			-			8			1,022			3,264
Charges for the three months ended May 4, 2013		250			-			-			250			250
Cash payments		(882	)		-			(5	)		(887	)
Non-cash items		-			-			-			-
Balance at May 4, 2013	$	382		$	-		$	3		$	385		$	3,514

In connection with our restructuring measures, we closed down the operations of our wholly-owned subsidiary in Canada, which filed for bankruptcy on May 30, 2013. Upon filing for bankruptcy, the main outstanding liability of our Canadian entity relates to minimum monthly payments under a non-cancelable operating lease agreement for office space. In accordance with the provisions of the lease agreement and current communication with the Landlord’s agent, if Sigma Canada exercises its early termination provision, Sigma Canada would be liable for an early termination penalty of $0.3 million and monthly lease payments of approximately $45,000 from May 2013 through May 2015, totaling $1.1 million. In accordance with applicable bankruptcy regulations, we believe that the obligations under this lease agreement would be discarded against our Canadian subsidiary and, therefore, we have not recorded any charges associated with the early termination of this non-cancelable lease agreement for the three months ended May 4, 2013.