Restructuring and Other Charges

6 Months Ended

Jul. 02, 2011

Restructuring and Other Charges [Abstract]

NOTE 7. RESTRUCTURING AND OTHER CHARGES

During the fourth quarter of fiscal 2010, Cadence initiated a restructuring plan, or the 2010 Restructuring Plan, which it announced in February 2011. Cadence initiated restructuring plans in each year from 2001 through 2005, in 2008 and in 2009, which are referred to collectively as the Other Restructuring Plans. Cadence initiated the 2010 Restructuring Plan, and the Other Restructuring Plans, collectively known as the Restructuring Plans, in an effort to operate more efficiently.

As of July 2, 2011, Cadence’s total amount accrued for the Restructuring Plans was $7.5 million, consisting of $0.8 million of severance and severance-related benefits and $6.7 million of estimated lease losses. The estimated lease losses will be adjusted in the future based on changes in the assumptions used to estimate the lease losses. The lease losses could be as high as $10.0 million and will be influenced by rental rates and the amount of time it takes to find suitable tenants to sublease the facilities. Of the $7.5 million accrued as of July 2, 2011, $2.1 million was included in Accounts payable and accrued liabilities and $5.4 million was included in Other long-term liabilities on Cadence’s Condensed Consolidated Balance Sheet.

Cadence regularly evaluates the adequacy of its lease loss, severance and related benefits accruals, and adjusts the balances based on actual costs incurred or changes in estimates and assumptions. Cadence may incur future charges to reflect actual costs incurred or for changes in estimates related to amounts previously recorded under the Restructuring Plans.

2010 Restructuring Plan

Since initiating the 2010 Restructuring Plan, Cadence has recorded total Restructuring and other charges associated with the 2010 Restructuring Plan of $14.0 million. Of the $14.0 million, $8.3 million is comprised of estimated severance payments, severance-related benefits and costs for outplacement services, $3.7 million is related to asset impairment charges and $2.0 million is related to lease loss accruals.

Total severance and termination benefits of $7.8 million were paid to employees before July 2, 2011. Approximately $0.8 million of severance and termination benefits is expected to be paid after July 2, 2011, all of which is included in Accounts payable and accrued liabilities in Cadence’s Condensed Consolidated Balance Sheet as of July 2, 2011. Because of varying regulations in the jurisdictions and countries in which Cadence operates, these workforce reductions are expected to be completed and realized by the end of fiscal 2011.

Cadence recorded Restructuring and other charges related to lease loss accruals of $0.8 million during the three months ended July 2, 2011 and $1.5 million during the six months ended July 2, 2011 for facilities that Cadence vacated or consolidated during the three and six months ended July 2, 2011. Cadence also recorded credits of $0.2 million during the three months ended July 2, 2011 and $0.8 million during the six months ended July 2, 2011 for severance and related benefits costs that were less than previously estimated.

The following table presents activity for the 2010 Restructuring Plan for the three months ended July 2, 2011:


	Severance
	and			Excess
	Benefits			Facilities			Total
	(In thousands)
Balance, April 2, 2011	$	2,177		$	974		$	3,151
Restructuring and other charges (credits), net		(159	)		781			622
Non-cash charges		----			1			1
Cash payments		(1,275	)		(373	)		(1,648	)
Effect of foreign currency translation		27			16			43

Balance, July 2, 2011	$	770		$	1,399		$	2,169

The following table presents activity for the 2010 Restructuring Plan for the six months ended July 2, 2011:


	Severance
	and			Excess
	Benefits			Facilities			Total
	(In thousands)
Balance, January 1, 2011	$	9,095		$	434		$	9,529
Restructuring and other charges (credits), net		(763	)		1,539			776
Non-cash charges		----			3			3
Cash payments		(7,760	)		(591	)		(8,351	)
Effect of foreign currency translation		198			14			212

Balance, July 2, 2011	$	770		$	1,399		$	2,169

Other Restructuring Plans

The following table presents activity for the Other Restructuring Plans for the three months ended July 2, 2011:


	Severance
	and			Excess
	Benefits			Facilities			Other		Total
	(In thousands)
Balance, April 2, 2011	$	26		$	5,356		$	5	$	5,387
Restructuring and other charges (credits), net		(2	)		131			----		129
Non-cash charges		----			71			----		71
Cash payments		(2	)		(288	)		----		(290	)
Effect of foreign currency translation		----			42			----		42

Balance, July 2, 2011	$	22		$	5,312		$	5	$	5,339

The following table presents activity for the Other Restructuring Plans for the six months ended July 2, 2011:


	Severance
	and			Excess
	Benefits			Facilities			Other		Total
	(In thousands)
Balance, January 1, 2011	$	103		$	5,434		$	5	$	5,542
Restructuring and other charges (credits), net		(77	)		11			----		(66	)
Non-cash charges		----			134			----		134
Cash payments		(4	)		(528	)		----		(532	)
Effect of foreign currency translation		----			261			----		261

Balance, July 2, 2011	$	22		$	5,312		$	5	$	5,339

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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