Note 18: Restructuring and Asset Impairments

Prior to the end of each of the June 2008, December 2008, and March 2009 quarters, the Company initiated the announced restructuring activities and management, with the proper level of authority, approved specific actions under the June 2008, December 2008, and March 2009 Plans (as defined below in this Note 18). Severance packages to affected employees were communicated in enough detail such that the employees could determine their type and amount of benefit. The termination of the affected employees occurred as soon as practical after the restructuring plans were announced. The amount of remaining future lease payments and certain contractual obligations for facilities the Company ceased to use and included in the restructuring charges is based on management's estimates using known prevailing real estate market conditions at that time based, in part, on the opinions of independent real estate experts. Leasehold improvements relating to the vacated buildings were written off, as it was determined that these items would have no future economic benefit to the Company and have been abandoned.

Accounting for restructuring activities, as compared to regular operating cost management activities, requires an evaluation of formally committed and approved plans. Restructuring activities have comparatively greater strategic significance and materiality and may involve exit activities, whereas regular cost containment activities are more tactical in nature and are rarely characterized by formal and integrated action plans or exiting a particular product, facility, or service.

The following table summarizes restructuring and asset impairment charges (recoveries) during fiscal years 2011, 2010, and 2009 for each restructuring Plan:

 

		Year Ended
		June 26, 2011				June 27, 2010				June 28, 2009
		(in thousands)
June 2008 Plan		$	—			$	(2,217	)		$	19,016
December 2008 Plan			(230	)			92				17,849
March 2009 Plan			11,809				20,891				28,641
Total restructuring and asset impairment charges incurred under restructuring plans			11,579				18,766				65,506
Asset impairments outside of specific restructuring plans			—				5,986				—
Total restructuring and assset impairment charges		$	11,579			$	24,752			$	65,506

The amounts in the table above were reported in the Company's consolidated statement of operations for fiscal years ended 2011, 2010, and 2009 as follows:

 

		Year Ended
		June 26, 2011				June 27, 2010				June 28, 2009
		(in thousands)
Cost of goods sold		$	—			$	3,438			$	20,993
Operating expense			11,579				21,314				44,513
Total restructuring and assset impairments		$	11,579			$	24,752			$	65,506

 

June 2008 Plan

During the June 2008 quarter, the Company incurred restructuring expenses and asset impairment charges related to the integration of SEZ and overall streamlining of the Company's combined Clean Product Group ("June 2008 Plan"). There were no restructuring and asset impairment charges under the June 2008 Plan during fiscal year 2011. Charges during fiscal years 2010 and 2009 were as follows:

 

		Year Ended
		June 27, 2010				June 28, 2009
		(in thousands)
Severance and benefits		$	(42	)		$	12,554
Facilities			—				—
Abandoned assets			—				3,395
Inventory			(2,175	)			3,067
Total restructuring and asset impairment charges		$	(2,217	)		$	19,016

Below is a table summarizing activity relating to the June 2008 Plan. There was no additional activity under this plan during fiscal year 2011 as all liabilities were paid in prior years.

 

		Severance and     Benefits				Facilities				Abandoned     Assets				Inventory				Total
		(in thousands)
Balance at June 29, 2008			4,586				899				—				—				5,485
Fiscal year 2009 expense			12,554				—				3,395				3,067				19,016
Cash payments			(13,155	)			(873	)			—				—				(14,028	)
Non-cash charges			(3,418	)			—				(3,395	)			(3,067	)			(9,880	)
Balance at June 28, 2009			567				26				—				—				593
Fiscal year 2010 expense			(42	)			—				—				(2,175	)			(2,217	)
Cash payments			(525	)			(26	)			—				—				(551	)
Non-cash charges			—				—				—				2,175				2,175
Balance at June 27, 2010		$	—			$	—			$	—			$	—			$	—

Total charges incurred as of June 26, 2011 under the June 2008 Plan were $35.8 million.

		Year Ended
		June 26, 2011				June 27, 2010				June 28, 2009
						(in thousands)
Severance and benefits		$	(43	)		$	472			$	23,038
Facilities			11,852				19,832				2,265
Abandoned assets			—				587				3,008
Inventory			—				—				330
Total restructuring and asset impairment charges		$	11,809			$	20,891			$	28,641