MOLX » Topics » Restructuring costs and asset impairments

These excerpts taken from the MOLX 10-K filed Aug 6, 2008.
Restructuring costs and asset impairments
 
During fiscal 2007, we undertook a restructuring plan designed to reduce costs and to improve return on invested capital as a result of a new global organization that was effective July 1, 2007. A majority of the plan relates to facilities located in North America and Europe and in general, the movement of manufacturing activities at these plants to other facilities. Net restructuring cost during the year ended June 30, 2008 was $31.2 million, resulting in cumulative costs since we announced the restructuring plan of $68.1 million. We have revised our initial estimate and now expect to incur total restructuring and asset impairment costs related to these actions ranging from $125 to $140 million, of which the impact on each segment will be determined as the actions become more certain. Management and the Board of Directors approved several actions related to this plan. A


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portion of this plan involves cost savings or other actions that do not result in incremental expense, such as better utilization of assets, reduced spending and organizational efficiencies. This plan includes employee reduction targets throughout the company, and we expect to achieve these targets through ongoing employee attrition and terminations. We expect to substantially complete the actions under this plan by June 30, 2010.
 
During fiscal 2008, we recognized net restructuring costs related to employee severance and benefit arrangements for approximately 900 employees, resulting in a charge of $17.6 million. A large part of these employee terminations occurred in our corporate headquarters and U.S. and Mexican manufacturing operations. In accordance with our planned restructuring actions, we have recorded additional asset impairment charges of $13.6 million to write-down assets to fair value less the cost to sell.
 
During fiscal 2007, we recognized additional restructuring costs related to employee severance and benefit arrangements for approximately 335 employees. A substantial majority of these employee terminations occurred within our Ireland manufacturing operations and various administrative functions in the Americas and European regions. In addition, we have vacated or plan to vacate several buildings and are holding these buildings and related assets for sale. This plan resulted in an impairment charge of $8.7 million to write-down these assets to fair value less the cost to sell these assets. The fair value of the asset groupings was determined using various valuation techniques.
 
During fiscal 2005, we decided to close certain operations in the Americas and European regions in order to reduce operating costs and better align our manufacturing capacity with customer needs. In the Americas region, we closed an industrial manufacturing facility in New England and have ceased manufacturing in our Detroit area automotive facility. In Europe, we closed certain manufacturing facilities in Ireland and Portugal and reduced the size of a development center in Germany. We also closed a manufacturing facility in Slovakia. Production from these manufacturing facilities was transferred to existing plants within the region. We also took actions that reduced our selling, general and administrative costs in the Americas and European regions and at the corporate office. We reduced headcount by approximately 500 people after additions at the facilities where production was transferred. These actions were substantially complete as of June 30, 2006.
 
The timing of the cash expenditures associated with these charges does not necessarily correspond to the period in which the accounting charge is taken. For additional information concerning the status of our restructuring programs see Note 5 of the Notes to Condensed Consolidated Financial Statements. See also “Forward-Looking Statements.”
 
Restructuring
costs and asset impairments



 



During fiscal 2007, we undertook a restructuring plan designed
to reduce costs and to improve return on invested capital as a
result of a new global organization that was effective
July 1, 2007. A majority of the plan relates to facilities
located in North America and Europe and in general, the movement
of manufacturing activities at these plants to other facilities.
Net restructuring cost during the year ended June 30, 2008
was $31.2 million, resulting in cumulative costs since we
announced the restructuring plan of $68.1 million. We have
revised our initial estimate and now expect to incur total
restructuring and asset impairment costs related to these
actions ranging from $125 to $140 million, of which the
impact on each segment will be determined as the actions become
more certain. Management and the Board of Directors approved
several actions related to this plan. A





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portion of this plan involves cost savings or other actions that
do not result in incremental expense, such as better utilization
of assets, reduced spending and organizational efficiencies.
This plan includes employee reduction targets throughout the
company, and we expect to achieve these targets through ongoing
employee attrition and terminations. We expect to substantially
complete the actions under this plan by June 30, 2010.


 



During fiscal 2008, we recognized net restructuring costs
related to employee severance and benefit arrangements for
approximately 900 employees, resulting in a charge of
$17.6 million. A large part of these employee terminations
occurred in our corporate headquarters and U.S. and Mexican
manufacturing operations. In accordance with our planned
restructuring actions, we have recorded additional asset
impairment charges of $13.6 million to write-down assets to
fair value less the cost to sell.


 



During fiscal 2007, we recognized additional restructuring costs
related to employee severance and benefit arrangements for
approximately 335 employees. A substantial majority of
these employee terminations occurred within our Ireland
manufacturing operations and various administrative functions in
the Americas and European regions. In addition, we have vacated
or plan to vacate several buildings and are holding these
buildings and related assets for sale. This plan resulted in an
impairment charge of $8.7 million to write-down these
assets to fair value less the cost to sell these assets. The
fair value of the asset groupings was determined using various
valuation techniques.


 



During fiscal 2005, we decided to close certain operations in
the Americas and European regions in order to reduce operating
costs and better align our manufacturing capacity with customer
needs. In the Americas region, we closed an industrial
manufacturing facility in New England and have ceased
manufacturing in our Detroit area automotive facility. In
Europe, we closed certain manufacturing facilities in Ireland
and Portugal and reduced the size of a development center in
Germany. We also closed a manufacturing facility in Slovakia.
Production from these manufacturing facilities was transferred
to existing plants within the region. We also took actions that
reduced our selling, general and administrative costs in the
Americas and European regions and at the corporate office. We
reduced headcount by approximately 500 people after
additions at the facilities where production was transferred.
These actions were substantially complete as of June 30,
2006.


 



The timing of the cash expenditures associated with these
charges does not necessarily correspond to the period in which
the accounting charge is taken. For additional information
concerning the status of our restructuring programs see
Note 5 of the Notes to Condensed Consolidated Financial
Statements. See also “Forward-Looking Statements.”


 




EXCERPTS ON THIS PAGE:

10-K (2 sections)
Aug 6, 2008

"Restructuring costs and asset impairments" elsewhere:

Power-One (PWER)
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