Note 11. Restructuring costs

9 Months Ended

Nov. 02, 2013

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

11.          Restructuring costs

In fiscal 2013, as a result of significant expansion inour infrastructure and operational activities in connection with purchases and acquisitions that took place between fiscal years 2008 and 2013, and in response to certain redundancies, underperforming operations and delays in programs and product releases, we implemented a restructuring program to realign our global operating expenses with our new business conditions, and to improve efficiency, competitiveness and profitability. In fiscal 2013, we reduced our workforce by approximately 114 employees, implemented plans to scale down our reliance on contractors and consultants, impaired the unamortized value of certain software intellectual property licenses, which we no longer intend to use, initiated the closure of our facilities in Canada, Hong Kong and Japan and reduced our discretionary spending across all operational areas. We recorded $3.2 million in restructuring charges in fiscal 2013. Of the total restructuring charges recorded in fiscal 2013, less than $0.1 million were reflected in cost of revenue and $3.1 million were reflected in operating expenses ($0.0 million in cost of revenue, $2.4 million in research and development, $0.4 million in sales and marketing and $0.4 million in general and administrative). Costs relating to facilities closure or lease commitment are recognized when the facility has been exited. Terminations costs are recognized when the costs are deemed both probable and estimable. We anticipate that these restructuring measures will reduce ongoing headcount expenses in research and development, sales and marketing and general and administrative by approximately $14.0 million to $14.5 million annually and other additional operational expenses by $0.4 million to $0.5 million annually which is in line with our original estimates. Our restructuring measures could negatively impact our revenues and results of operations in the future as a result of less employees developing future products and working to sell our products.

In the first quarter of fiscal 2014, we recorded restructuring charges of approximately $0.2 million related to a workforce reduction of 17 employees with related charges to cost of revenue and operating expenses of $33,000 and $210,000, respectively. In the second quarter of fiscal 2014, and as part of our ongoing restructuring plan, we incurred restructuring charges of approximately $0.5 million net, related to a contingent liability under our lease obligation in Canada and $0.2 million in severance-related charges that resulted from a workforce reduction of eight employees. Of the total restructuring charges and exit costs recorded in the second quarter of fiscal 2014, there were no restructuring charges reflected in cost of revenue and $0.7 million were reflected in operating expenses ($0.1 million in research and development, $0.1 million in sales and marketing and $0.5 million in general and administrative). In the third quarter of fiscal 2014, and as part of our continuing effort to reduce expenses, we incurred restructuring charges of approximately $1.1 million, of which $1.0 million was related to a workforce reduction of 17 employees across several geographic regions and $0.1 million was related to the termination of a lease agreement and related costs in Canada. Of the total restructuring charges recorded in the third quarter of fiscal 2014, there were no restructuring charges reflected in cost of revenue and $1.1 million were reflected in operating expenses ($0.0 million in cost of revenue, $0.8 million in research and development, $0.1 million in sales and marketing and $0.2 million in general and administrative).

Expenses recognized for restructuring activities impacting our operating expenses are presented in the “Restructuring costs” line of the condensed consolidated statements of operations. We anticipate that these restructuring measures will reduce ongoing headcount expenses in research and development, sales and marketing and general and administrative by approximately $4.0 million to $4.5 million annually and other additional operational expenses by $0.4 million to $0.5 million annually. Our restructuring measures could negatively impact our revenues and results of operations in the future as a result of less employees developing future products and working to sell our products.

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
Charges for the three months ended August 3, 2013		234			-			446			680			680
Cash payments		(551	)		-			(14	)		(565	)		-
Non-cash items		-			-			-			-			-
Balance at August 3, 2013	$	65		$	-		$	435		$	500		$	4,194
Charges for the three months ended November 2, 2013		968			-			137			1,105			1,105
Cash payments		(235	)		-			(501	)		(736	)		-
Non-cash items		-			-			-			-			-
Balance at November 2, 2013	$	798		$	-		$	70		$	869		$	5,299

* The amount above includes $40,000 of certain restructuring charges that were recorded in the cost of revenue.