Note 10 - Restructuring

3 Months Ended

Jul. 02, 2011

Restructuring and Related Activities Disclosure [Text Block]

10. Restructuring

During 2006, the company announced the closing of its Ireland facility, resulting in restructuring charges of $17.1 million, consisting of $20.0 million of accrued severance less a statutory rebate of $2.9 million recorded as a current asset, which were recorded as part of cost of sales. This restructuring, which impacted approximately 131 employees, is part of the company’s strategy to expand operations in Asia-Pacific region in order to be closer to current and potential customers and take advantage of lower manufacturing costs. The restructuring charges were based upon each employee’s salary and length of service with the company. The additions in 2009 and 2010 primarily relate to retention costs that were incurred during the transition period. All charges related to the closure of the Ireland facility were recorded in “Other Operating Income (Loss)” for business unit segment reporting purposes. The total cost expected to be incurred is $26.1 million. The company has incurred $26.1 million through April 2, 2011 with no further costs expected.  This restructuring has been fully paid as of April 2, 2011.

A summary of activity of this liability is as follows:

Ireland restructuring (in thousands)

Balance at December 27, 2008	$	1,651
Additions		11
Payments		(1,454	)
Exchange rate impact		(25	)
Balance at January 2, 2010		183
Additions		80
Payments		—
Exchange rate impact		(15	)
Balance at January 1, 2011		248
Additions		—
Payments		(264	)
Exchange rate impact		16
Balance at April 2, 2011	$	—

During December 2006, the company announced the closure of its Irving, Texas facility and the transfer of its semiconductor wafer manufacturing from Irving, Texas to Wuxi, China in a phased transition from 2007 to 2010. A liability of $1.9 million was recorded related to redundancy costs for the manufacturing operation associated with this downsizing. This charge was recorded as part of cost of sales and included in “Other Operating Income (Loss)” for business unit segment reporting purposes. The additions in 2009 and 2010 primarily relate to retention costs that were incurred during the transition period. This restructuring impacted approximately 180 employees in various production and support related roles and will be paid over the period 2007 to 2011.

During March 2007, the company announced the closure of its Des Plaines and Elk Grove, Illinois, facilities and the transfer of its manufacturing from Des Plaines, Illinois to the Philippines and Mexico in a phased transition from 2007 to 2009. A liability of $3.5 million was recorded related to redundancy costs for the manufacturing and distribution operations associated with this restructuring. Manufacturing related charges of $3.0 million were recorded as part of cost of sales and non-manufacturing related charges of $0.5 million were recorded as part of selling, general and administrative expenses. All charges related to this downsizing were recorded in “Other Operating Income (Loss)” for business unit segment reporting purposes. The additions in 2008 and 2009 primarily relate to retention costs that were incurred during the transition period. This restructuring impacted approximately 307 employees in various production and support related roles and the costs relating to the restructuring were paid over the period 2007 to 2010.

During December 2008, the company announced a reduction in workforce at its Des Plaines, Illinois corporate headquarters in a phased transition from 2008 to 2010. A liability of $0.9 million was recorded associated with this downsizing. Manufacturing related charges of $0.3 million were recorded as part of cost of sales and non-manufacturing related charges of $0.6 million were recorded as part of selling, general and administrative expenses. All charges related to this downsizing were recorded in “Other Operating Income (Loss)” for business unit segment

reporting purposes. During 2009, an additional $1.1 million liability was recorded related to severance and retention costs at the Des Plaines facility. The remaining additions in 2009 and 2010 primarily relate to retention costs that will be incurred over the transition period. This restructuring impacted 39 employees in various production and support related roles and the costs relating to the restructuring will be paid over the period 2009 to 2011.

The total cost expected to be incurred for the Irving, Texas and Des Plaines and Elk Grove, Illinois related restructuring programs is $19.2 million. The company has incurred $19.2 million through July 2, 2011. A summary of activity of this liability is as follows:

Irving, Des Plaines and Elk Grove restructuring (in thousands)

Balance at December 27, 2008	$	9,608
Additions		3,977
Payments		(8,993	)
Balance at January 2, 2010		4,592
Additions		1,168
Payments		(4,324	)
Balance at January 1, 2011		1,436
Additions		115
Payments		(273	)
Balance at April 2, 2011		1,278
Additions		3
Payments		(307	)
Balance at July 2, 2011	$	974

During September 2008, the company announced the closure of its Swindon, U.K., facility, resulting in restructuring charges of $0.8 million, consisting of $0.3 million that was recorded as part of cost of sales and $0.5 million that was recorded as part of research and development expenses. These charges, which impact 10 employees, were primarily for redundancy costs and will be paid through 2011. Restructuring charges are based upon each employee’s current salary and length of service with the company. All charges related to the closure of the Swindon facility were recorded in “Other Operating Income (Loss)” for business unit segment reporting purposes. The total cost expected to be incurred is $1.3 million. The company has incurred $1.3 million through July 2, 2011. A summary of activity of this liability is as follows:

Swindon, U.K. restructuring (in thousands)

Balance at December 27, 2008	$	834
Additions		299
Payments		(1,048	)
Balance at January 2, 2010		85
Additions		26
Payments		(53	)
Balance at January 1, 2011		58
Additions		13
Payments		—
Balance at April 2, 2011		71
Additions		—
Payments		(45	)
Balance at July 2, 2011	$	26

During May 2009, the company announced the restructuring of its European organization. The restructuring included the transfer of its manufacturing operations from Dünsen, Germany to Piedras Negras, Mexico and the closure of its distribution facility in Utrecht, Netherlands. The Dünsen closure will impact approximately 58 production employees.

The Utrecht closure impacted approximately 37 employees primarily in customer service and administrative roles. The restructuring for Utrecht was completed in the first quarter of 2010.  The Dünsen closure is expected to be completed in the third quarter of 2011.  The charges recorded for severance and retention and asset impairments were approximately $2.3 million in Utrecht, Netherlands (reflected in selling, general and administrative expenses) and approximately $3.2 million in Dünsen, Germany (reflected within cost of sales). All charges related to the closure of the Dünsen and Utrecht facilities were recorded in “Other Operating Income (Loss)” for business unit segment reporting purposes. The remaining additions in 2010 primarily relate to retention costs that were incurred during the transition period.

The total cost related to the European restructuring program expected to be incurred is $5.6 million. The company has incurred $5.6 million in costs, including asset impairment charges, through July 2, 2011 with no additional costs expected to be incurred. A summary of the activity of this liability is as follows:

European restructuring (in thousands)

Balance at December 27, 2008	$	—
Additions		5,453
Payments		(686	)
Exchange rate impact		87
Balance at January 2, 2010		4,854
Additions		135
Payments		(3,983	)
Exchange rate impact		(155	)
Balance at January 1, 2011		851
Additions		—
Payments		(393	)
Exchange rate impact		45
Balance at April 2, 2011		503
Additions		—
Payments		(159	)
Exchange rate impact		12
Balance at July 2, 2011	$	356

During May 2009, the company also announced a restructuring of its Asian operations. The restructuring includes closure of a manufacturing facility in Taiwan and a consolidation of its Asian sales offices. The closure of the Taiwan facility and Asian sales offices will impact approximately 184 employees. The charge recorded for this restructuring totaled $0.9 million and was related to severance and retention costs with $0.4 million and $0.5 million included within cost of sales and selling, general and administrative expenses, respectively.  All charges related to the closure and the consolidation of the Asian facilities were recorded in “Other Operating Income (Loss)” for business unit segment reporting purposes. The remaining additions in 2009 and 2010 primarily relate to retention costs that were incurred during the transition period. The total cost expected to be incurred is $1.6 million. The company has incurred $1.6 million through July 2, 2011 related to the Asian restructuring program. A summary of activity of this liability is as follows:

Asian restructuring (in thousands)

Balance at December 27, 2008	$	—
Additions		1,456
Payments		(291	)
Exchange rate impact		38
Balance at January 2, 2010		1,203
Additions		278
Payments		(372	)
Exchange rate impact		63
Balance at January 1, 2011		1,172
Additions		149
Payments		(8	)
Exchange rate impact		25
Balance at April 2, 2011		1,338
Additions		187
Payments		(666	)
Exchange rate impact		(21	)
Balance at July 2, 2011	$	838