Purchased In-Process Research And Development (IPR&D) And Special Charges

9 Months Ended

Oct. 01, 2011

Purchased In-Process Research And Development (IPR&D) And Special Charges [Abstract]

Purchased In-Process Research And Development (IPR&D) And Special Charges

NOTE 7 – PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT (IPR&D) AND SPECIAL CHARGES

IPR&D Charges

During the second quarter of 2011, the Company recorded IPR&D charges of $4.4 million in conjunction with the purchase of intellectual property in its CRM segment since the related technological feasibility had not yet been reached and such technology had no future alternative use.

Special Charges

During the first nine months of 2011, the Company incurred charges totaling $71.8 million primarily related to ongoing restructuring actions that began in the second quarter of 2011 to realign certain activities in its CRM business as well as costs primarily associated with continuing efforts to improve the Company's international sales and sales support organization.

Employee Termination Costs: A key component of these restructuring activities related to the Company's decision to transition CRM manufacturing out of Sweden to more cost-advantaged locations. As part of these actions as well as the efforts to enhance the efficiency and effectiveness of the Company's international sales and sales support organization, the Company recorded $33.9 million related to severance and benefit costs for approximately 380 employees. These costs were recognized after management determined that such severance and benefits were probable and estimable, in accordance with Accounting Standards Codification (ASC) Topic 712, Nonretirement Postemployment Benefits. Of the total $33.9 million charge, $2.8 million was recorded in cost of sales.

Inventory Charges: The Company recorded a $6.5 million charge in cost of sales relating to inventory obsolescence charges.

Long-Lived Asset Charges: The Company recorded $19.4 million of impairment and accelerated depreciation charges, of which $12.0 million related to an impairment charge to write-down the Company's CRM manufacturing facility in Sweden to its fair value. The impairment charge was recognized in accordance with ASC Topic 360, Property, Plant and Equipment after it was determined that its remaining undiscounted future cash flows did not exceed its carrying value. Of the $19.4 million charge, $7.9 million was recorded in cost of sales.

Other Charges: The Company recorded charges of $11.9 million associated with contract terminations and other costs. Of the $11.9 million charge, $1.5 million was recorded in cost of sales.

A summary of the activity related to the 2011 special charge restructuring accrual is as follows (in thousands):

	Employee termination costs			Inventory charges			Long-lived asset charges			Other			Total
Balance at January 1, 2011	$	—		$	—		$	—		$	—		$	—
Special charges		33,921			6,484			19,425			11,934			71,764
Non-cash charges used		—			(6,484	)		(19,425	)		(574	)		(26,483	)
Cash payments		(20,429	)		—			—			(3,517	)		(23,946	)
Foreign exchange rate impact		(2	)		—			—			(348	)		(350	)
Balance at October 1, 2011	$	13,490		$	—		$	—		$	7,495		$	20,985

As part of the Company's decision to transition CRM manufacturing out of Sweden, the Company expects to incur additional costs of approximately $50 - $70 million over the next several quarters related to additional employee termination costs, accelerated depreciation and other restructuring related costs. The Company expects to fully transition its manufacturing operations out of Sweden by the end of fiscal year 2012.