Restructuring

9 Months Ended

Sep. 30, 2011

Restructuring [Abstract]

RESTRUCTURING

7. RESTRUCTURING

On September 21, 2011, the Board of Directors of the Company approved a workforce reduction and authorized management to proceed with the reduction. On September 26, 2011, the Company issued a press release announcing the workforce reduction plan, which provides for a reduction in the number of employee positions at the Company from approximately 1,275 to approximately 1,000 by early 2012. The total cost of the restructuring plan is expected to be approximately $8.0 to $10.0 million. The Company has incurred $2.1 million of related charges to date and expects to recognize the remaining expenses over the next nine months. The Company is taking these actions in order to reduce operating costs and realign its organization in the current competitive operating environment.

The Company incurred a restructuring charge of $3.5 million and $8.1 million for the three and nine months ended September 30, 2011, respectively, including $2.1 million for non-recurring employee-related termination benefits, including severance payments and continuation of medical insurance benefits related to the September 26, 2011 plan. Restructuring charges also include $1.4 million for similar benefits related to a previous reduction in force, subject to local laws and regulations and in consultation with local works councils in Europe. These charges were not estimable until settlement, which occurred during the three months ended September 30, 2011. The September 26, 2011 plan also includes actions subject to local works council requirements in Europe for which the charges are currently not estimable.

During the three months ended March 31, 2011, the Company approved plans to restructure some of its research and development operations. These plans included the closure of a facility in Israel and significant downsizing of a facility in San Diego, California during the quarter ended June 30, 2011. The remaining liability related to restructuring actions taken prior to September 26, 2011 is primarily related to operating lease commitments on exited facilities.

Prior to the close of the Company’s acquisition from NXP of selected assets and liabilities of NXP’s television systems and set-top box business lines, NXP initiated a restructuring plan pursuant to which the employment of some NXP employees was terminated upon the close of the merger. The Company determined that the restructuring plan was a separate plan from the business combination because the plan to terminate the employment of certain employees was made in contemplation of the acquisition. Therefore, a severance cost of $3.6 million was recognized by the Company as an expense on the acquisition date and is included in the total restructuring charge of approximately $8.4 million for the three months ended March 31, 2010. The $3.6 million of severance cost was paid by NXP after the close of the acquisition, effectively reducing the purchase consideration transferred. See Note 5, “Business Combinations,” of Notes to Condensed Consolidated Financial Statements. Also during the three months ended March 31, 2010, the Company shut down one of its European locations in an effort to streamline its operations and recorded $4.5 million of restructuring expenses related to severance and related employee benefits to employees who will be terminated. Restructuring charges are recorded under Restructuring charges in the Company’s Condensed Consolidated Statement of Operations.

The following table presents the changes in the Company’s restructuring accrual for the three and nine months ended September 30, 2011 and 2010:

	Three months Ended September 30,		Nine Months Ended September 30,
(In thousands)	2011	2010	2011	2010

Restructuring liabilities, beginning of period	$	1,215		$	1,105		$	2,983		$	—
Severance and related charges		3,496			2,301			8,148			15,166
Adjustments		16			—			1,218			—
Net cash payments		(2,131	)		(1,252	)		(9,789	)		(13,012	)
Foreign exchange loss		(58	)		—			(22	)		—
Restructuring liabilities, end of period	$	2,538		$	2,154		$	2,538		$	2,154

The Company expects to pay the remaining liability over the next twelve months.