(4) Restructuring Charges

In addition to monitoring the global macro-economic environment and impact on its businesses and products, the Company also evaluates its operations for opportunities to improve operational effectiveness and efficiency and to better align expenses with revenues. As a result of these assessments, the Company has undertaken various restructuring actions. These actions are described below. The following table displays charges taken related to restructuring actions in fiscal 2013 and 2012 and a rollforward of the charges to the accrued balances as of December 29, 2012.


Restructuring Charges	Abandonment of Adiana Product Line			Consolidation of Diagnostics Operations			Closure of Indianapolis Facility			Other Operating Cost Reductions			Total

Fiscal 2012 charges:
Non-cash impairment charge	$	16,316		$	585		$	—		$	—		$	16,901
Purchase orders and other contractual obligations		3,099			—			—			—			3,099
Workforce reductions		128			14,202			879			40			15,249
Facility closure costs		—			—			—			430			430
Other		—			—			900			—			900


Total fiscal 2012 charges	$	19,543		$	14,787		$	1,779		$	470		$	36,579

Recorded to cost of product sales	$	19,064		$	—		$	—		$	—		$	19,064

Recorded to restructuring	$	479		$	14,787		$	1,779		$	470		$	17,515

Fiscal 2013 charges:
Workforce reductions		—			1,792			1,489			—			3,281
Other		—			—			652			—			652


Total fiscal 2013 charges	$	—		$	1,792		$	2,141		$	—		$	3,933


Rollforward of Accrued Restructuring

Total fiscal 2012 charges	$	19,543		$	14,787		$	1,779		$	470		$	36,579
Non-cash impairment charges		(16,316	)		(585	)		—			—			(16,901	)
Stock compensation		—			(3,500	)		—			—			(3,500	)
Severance payments		(128	)		(2,423	)		—			(78	)		(2,629	)
Purchase orders and other contractual obligations payments		(2,572	)		—			—			—			(2,572	)
Other payments		—			—			—			(430	)		(430	)
Acquired		—			83			—			—			83
Foreign exchange and other adjustments		—			22			—			91			113

Balance at September 29, 2012	$	527		$	8,384		$	1,779		$	53		$	10,743

Fiscal 2013 charges		—			1,792			2,141			—			3,933
Stock compensation		—			(222	)		—			—			(222	)
Severance payments		—			(6,775	)		—			(53	)		(6,828	)
Purchase orders and other contractual obligations payments		(527	)		—			(211	)		—			(738	)
Foreign exchange and other adjustments		—			5			—			—			5

Balance at December 29, 2012	$	—		$	3,184		$	3,709		$	—		$	6,893

Abandonment of Adiana Product Line

At the end of the second quarter of fiscal 2012, the Company decided to cease manufacturing, marketing and selling its Adiana system, which was a product line within the Company’s GYN Surgical reporting segment. Management determined that the product was not financially viable and would not become so in the foreseeable future. In addition, the Company settled its intellectual property litigation regarding the Adiana system with Conceptus, Inc., which did not result in any additional charges. In the second quarter of fiscal 2012, the Company recorded a charge of $18.3 million and recorded additional adjustments in fiscal 2012 resulting in an aggregate charge of $19.5 million. Of the total charge, $19.1 million was recorded within cost of product sales and $0.4 million was recorded in restructuring. The amount recorded in cost of product sales comprised impairment charges of $9.9 million to record inventory at its net realizable value, $6.5 million to write down certain manufacturing equipment and equipment placed at customer sites to its fair value that had no further utility, and $2.7 million for outstanding contractual purchase orders of raw materials and components that will not be utilized and other contractual obligations. In connection with this action, the Company terminated certain manufacturing and other personnel primarily at its Costa Rica location, resulting in severance charges of $0.1 million, and incurred other contractual charges of $0.3 million. All identified employees were terminated and paid as of September 29, 2012.

Consolidation of Diagnostics Operations

In connection with its acquisition of Gen-Probe, the Company implemented restructuring actions to consolidate its Diagnostics business, such as streamlining product development initiatives, reducing overlapping functional areas such as sales, marketing and general and administrative functions, and consolidation of manufacturing resources, field services and support. As a result, the Company terminated certain employees from Gen-Probe and its legacy diagnostics business in research and development, sales, marketing, and general and administrative functions. The Company recorded severance and benefit charges in fiscal 2012 of $13.3 million related to this action pursuant to ASC 420, Exit or Disposal Cost Obligations (ASC 420). The majority of these employees ceased working in the fourth quarter of fiscal 2012, and their full severance charge was recorded in the fourth quarter of fiscal 2012. In addition, certain of the terminated Gen-Probe employees had unvested stock options and the vesting terms were accelerated as a result of termination. As such, the severance charges in fiscal 2012 include $3.5 million of stock-based compensation expense. In the first quarter of fiscal 2013, the Company recorded $0.8 million of severance charges, including $0.2 million for stock-based compensation.

In addition, the Company is moving its legacy molecular diagnostics operations from Madison, Wisconsin to Gen-Probe’s facilities in San Diego, California. This transfer is expected to be finalized by the end of calendar 2014, and the majority of employees in Madison will be terminated in fiscal 2013 and 2014. The Company is recording severance and benefit charges pursuant to ASC 420 and estimates the total severance and benefits charge to be approximately $6.4 million, which will be recorded ratably over the estimated service period of the affected employees. The Company recorded $1.0 million in the first quarter of fiscal 2013 and $0.9 million in the fourth quarter of fiscal 2012. The Company also recorded non-cash charges of $0.6 million in the fourth quarter of fiscal 2012 as a result of exiting certain research projects. Additional charges, which are not expected to be significant, will be recorded as the manufacturing operation is transferred and the facility is closed down. These charges will be recorded as they are incurred.

Closure of Indianapolis Facility

In the fourth quarter of fiscal 2012, the Company finalized its decision to transfer production of its interventional breast products, which are included within the Breast Health reporting segment, from its Indianapolis facility to its facility in Costa Rica. The transfer is expected to be completed in the first half of calendar 2014, and all employees at the Indianapolis location will be terminated. The Company is recording severance and benefit charges pursuant to ASC 420 and estimates the total severance and benefits charge to be approximately $6.4 million, which will be recorded ratably over the estimated service period of the affected employees. The Company recorded $1.5 million of severance benefits in the first quarter of fiscal 2013 and $0.9 million in the fourth quarter of fiscal 2012. In addition, the Company recorded $0.7 million in the first quarter of fiscal 2013 for additional miscellaneous items and $0.9 million in the fourth quarter of fiscal 2012 for amounts owed to the state of Indiana for employment credits. Additional charges, which are not expected to be significant, will be recorded as the manufacturing operation is transferred and the facility is closed down. These charges will be recorded as they are incurred.

Consolidation of Selenium Panel Coating Production

During the third quarter of fiscal 2012, the Company finalized its decision to consolidate its Selenium panel coating process and transfer the production line to its Newark, Delaware facility from its Hitec-Imaging German subsidiary. This production line is included within the Breast Health segment. The transfer is expected to be completed in the second half of fiscal 2013. In connection with this consolidation plan, the Company expects to terminate certain employees, primarily manufacturing personnel. Severance charges will be recorded pursuant to ASC 420 because the severance benefits qualify as one-time employee termination benefits. Since communication of the severance benefit to the affected employees had not been made as of December 29, 2012, no charges have been recorded as of December 29, 2012. Employees must continue to be employed by the Company until their employment is involuntarily terminated in order to receive the severance benefit. As such, the severance benefit will be recognized ratably over the required service period once the individual severance benefits are known and communicated to the employees. The termination communications began in January 2013. The Company expects to incur between $1.2 million and $1.4 million for severance charges in fiscal 2013.