Note 11. Restructuring costs

6 Months Ended

Aug. 03, 2013

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

11.          Restructuring costs

In fiscal 2013, we initiated a number of targeted actions to address several areas in our business model which resulted in the adoption of company-wide cost saving measures. These actions were intended to align our cost structure with our current business outlook and divest or exit underperforming operations. As a result of the restructuring program, we recognized total restructuring costs of $3.3 million in fiscal 2013.

Pursuant to these restructuring initiatives, during the quarter ended May 4, 2013, we took further actions resulting in the headcount reduction of 17 employees and severance and termination related charges to cost of revenues and operating expenses of $40,000 and $210,000, respectively. Expenses recognized for restructuring activities impacting our operating expenses are presented in the “Restructuring costs” line of the condensed consolidated statements of operations.

For the quarter ended August 3, 2013, we had restructuring costs which were comprised of headcount adjustments of $0.2 million related to the closure of the Canada office and a facility accrual of $0.8 million for the related Canada lease, which were partially offset by the reversal of deferred rent related to the Canada lease. In connection with our restructuring measures, we closed down the operations of our wholly-owned subsidiary in Canada, which filed for bankruptcy on May 30, 2013. Upon filing for bankruptcy, the main outstanding liability of our Canadian entity relates to minimum monthly payments under a non-cancelable operating lease agreement for office space. In accordance with the provisions of the lease agreement and current communication with the landlord’s agent, if Sigma Canada exercises its early termination provision, Sigma Canada would be liable for an early termination penalty of $0.3 million and monthly lease payments of approximately $45,000 from May 2013 through May 2015 for a total exposure of $1.1 million. If we elect to sublease the premises instead of exercising the option to terminate the lease, our potential exposure could be reduced if an agreement were entered into in a reasonable timeframe and on reasonable terms.  Given the information received regarding the relevant Canadian real estate market, it appears at this stage that the potential exposure would be in the range of $0.8 million adjusted for recovery from the bankruptcy estate.    

The following table summarizes the restructuring costs, outstanding payable balance and cumulative restructuring costs (in thousands):

	Employee Severance			Impairment of Long-Lived Assets			Facility Exit Costs			Total			Cumulative Restructuring Costs
Charges in fiscal 2013	$	2,167		$	1,089		$	8		$	3,264		$	3,264
Cash payments		(1,153	)		-			-			(1,153	)
Non-cash items		-			(1,089	)		-			(1,089	)
Balance at February 2, 2013		1,014			-			8			1,022			3,264
Charges for the three months ended May 4, 2013*		250			-			-			250			250
Cash payments		(882	)		-			(5	)		(887	)
Non-cash items		-			-			-			-
Balance at May 4, 2013	$	382		$	-		$	3		$	385		$	3,514
Charges for the three months ended August 3, 2013		234			-			446			680			680
Cash payments		(551	)		-			(14	)		(565	)
Non-cash items		-			-
Balance at August 3, 2013	$	65		$	-		$	435		$	500		$	4,194

* The amount above includes $40,000 of certain restructuring charges that were recorded in the cost of revenue.