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Restructuring And Other Charges
 3 Months Ended
Mar. 30, 2012
Restructuring And Other Charges [Abstract]  
Restructuring And Other Charges

 

2. Restructuring and Other Charges

On January 30, 2012, management initiated a restructuring plan that aligns expenses with revenue. Tellabs is stopping new development on the Tellabs® SmartCore® 9100 product and consolidating research and development into fewer locations. The pretax charges for this plan will consist of $23 million for workforce reductions of approximately 510 employees, $36 million for facility- and asset-related charges and $48 million for the accelerated amortization for abandoned intangible assets. Restructuring expense for the first quarter of 2012 was $104.5 million, which consists of $22.9 million for workforce reductions, $32.7 million for facility- and asset-related charges, $47.7 million for the accelerated amortization of abandoned intangible assets, and $1.2 million for other obligations. By segment, total charges under this plan are $98.9 million for Broadband, $3.1 million for Transport, and $2.5 million for Services. Estimated cash payments under this plan are expected to be $31.4 million through 2017. Other than the cash payments, actions under this plan are expected to be substantially completed by the end of the first quarter of 2013.

On July 25, 2011, management initiated a restructuring plan to align our cost structure to business conditions at that time. We expect to record pretax charges through the second quarter of 2012 of approximately $22 million. The pretax charges will consist of $16 million for workforce reductions of approximately 280 employees and $6 million for facility- and asset-related charges. Restructuring expense for the first quarter of 2012 was $1.6 million, which consists of $1.3 million for workforce reductions and $0.3 million for facility- and asset-related charges. Cumulative restructuring charges for this plan are $21.3 million, which consists of $15.8 million for severance-related charges, $4.9 million for facility- and asset-related charges, and $0.6 million for other obligations. By segment, total charges to date under this plan are $10.9 million for Broadband, $5.0 million for Transport and $5.4 million for Services. Estimated cash payments under this plan are expected to be $18.6 million through the third quarter of 2014. Other than the cash payments, actions under this plan are expected to be substantially completed by the end of the second quarter of 2012.

A restructuring credit for previous restructuring plans in the first quarter of 2012 was $0.1 million for severance-related charges.

The balance for restructuring plans relates to net lease obligations that expire through 2017 and cash severance that we expect to pay through the first quarter of 2014.

The following table summarizes restructuring and other charges recorded for the plans mentioned above, as well as adjustments to reserves recorded for prior restructurings:

 

 

 

First Quarter

 

 

 

3/30/12

 

 

4/1/11

 

Severance and other termination benefits

 

$

24.1

 

 

$

1.2

 

Facility and other exit costs

 

 

33.0

 

 

 

(0.2

) 

Accelerated amortization of intangible assets

 

 

47.7

 

 

 

—  

 

Other obligations

 

 

1.2

 

 

 

—  

 

 

 

 

 

 

 

 

 

Total restructuring and other charges

 

$

106.0

 

 

$

1.0

 

 

 

 

 

 

 

 

 

 

The following table summarizes restructuring and other charges activity by segment for the first quarter of 2012 and the status of the reserves at March 30, 2012:

 

 

 

Balance at
12/30/11

 

 

Restructuring
Expense

 

 

Cash
Payments

 

 

Other
Activities 1

 

 

Balance at
3/30/12

 

2012 Restructuring Plan

 

 

 

 

 

Broadband

 

$

—  

 

 

$

98.9

 

 

$

(8.1

) 

 

$

(72.5

) 

 

$

18.3

 

Transport

 

 

—  

 

 

 

3.1

 

 

 

(0.3

) 

 

 

(0.3

) 

 

 

2.5

 

Services

 

 

—  

 

 

 

2.5

 

 

 

(0.5

) 

 

 

—  

 

 

 

2.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal 2012 Restructuring Plan

 

 

—  

 

 

 

104.5

 

 

 

(8.9

) 

 

 

(72.8

) 

 

 

22.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2011 Restructuring Plan

 

 

 

 

 

Broadband

 

 

7.4

 

 

 

0.5

 

 

 

(2.0

) 

 

 

(0.2

) 

 

 

5.7

 

Transport

 

 

3.6

 

 

 

(0.3

) 

 

 

(1.1

) 

 

 

—  

 

 

 

2.2

 

Services

 

 

1.6

 

 

 

1.4

 

 

 

(1.3

) 

 

 

—  

 

 

 

1.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal 2011 Restructuring Plan

 

 

12.6

 

 

 

1.6

 

 

 

(4.4

) 

 

 

(0.2

) 

 

 

9.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Previous Restructuring Plans

 

 

 

 

 

Broadband

 

 

4.7

 

 

 

(0.1

) 

 

 

(0.5

) 

 

 

—  

 

 

 

4.1

 

Transport

 

 

0.2

 

 

 

—  

 

 

 

—  

 

 

 

—  

 

 

 

0.2

 

Services

 

 

0.2

 

 

 

—  

 

 

 

(0.1

) 

 

 

—  

 

 

 

0.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Previous Restructuring Plans

 

 

5.1

 

 

 

(0.1

) 

 

 

(0.6

) 

 

 

—  

 

 

 

4.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Restructuring Plans

 

$

17.7

 

 

$

106.0

 

 

$

(13.9

) 

 

$

(73.0

) 

 

$

36.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Other activities include accelerated amortization related to abandoned intangible assets, accelerated depreciation of property, plant and equipment to be disposed, the effects of currency translation as well as other changes that do not flow through restructuring expense.