Restructuring Charges

12 Months Ended

Sep. 30, 2011

Restructuring Charges [Abstract]

Restructuring Charges

7. Restructuring Charges

In August 2011, the Company announced a realignment of its business to optimize the Company’s resources according to its strategic plan. As a result of the organizational change, the Company eliminated approximately 9% of its workforce. These employee terminations occurred across various functions, and the reorganization plan was completed by the end of the fourth quarter of fiscal 2011. The Company recorded total pre-tax restructuring charges of $1.0 million in the fourth quarter of fiscal 2011, which consisted of $1.0 million of severance pay and benefits expenses.

In October 2010, the Company announced initiatives to reduce its cost structure and renew its focus on business units to more closely match operations and cost structure with the current customer environment. As a result of the organizational change, the Company eliminated 30 positions, or approximately 13% of its workforce. These employee terminations occurred across various functions, and the reorganization plan was completed by the end of the first quarter of fiscal 2011. The reorganization also resulted in SurModics vacating a leased production facility in Birmingham, Alabama and relocating the production activities to one of its owned facilities in Birmingham. The Company recorded total pre-tax restructuring charges of $1.2 million in the first quarter of fiscal 2011, which consisted of $1.2 million of severance pay and benefits expenses and less than $0.1 million of facility-related costs.

In March 2010, the Company announced an organizational change designed to support future growth by better meeting customer needs, leveraging its multiple competencies across the organization, and building on its pharmaceutical industry experience. As a result of the reorganization, the Company eliminated 11 positions, or approximately 4% of the Company’s workforce. These employee terminations occurred across various functions and the reorganization plan was completed by the end of the third quarter of fiscal 2010. The Company also vacated and subleased its leased sales office in Irvine, California and vacated a leased warehouse in Birmingham, Alabama, as part of the reorganization plan. Both leased spaces were vacated by March 31, 2010. The Company recorded total pre-tax restructuring charges of approximately $1.3 million in connection with the fiscal 2010 reorganization, which consisted of $0.8 million of severance pay and benefits expenses and $0.5 million of facility-related costs.

In November 2008, the Company announced a functional reorganization to allow the Company to better serve its customers and improve its operating performance. As a result of the reorganization, the Company eliminated 15 positions, or approximately 5% of the Company’s workforce. These employee terminations occurred across various functions and the reorganization plan was completed by the end of the first quarter of fiscal 2009. The Company also vacated a leased facility in Eden Prairie, Minnesota, consolidating into its owned office and research facility also in Eden Prairie, as part of the reorganization plan. The Company recorded total pre-tax restructuring charges of approximately $1.8 million in connection with the fiscal 2009 reorganization, which consisted of $0.5 million of severance pay and benefits expenses and $1.3 million of facility-related costs.

Cash payments related to all restructuring events totaled $2.4 million in fiscal 2011, resulting in a restructuring accrual balance of $1.0 million at September 30, 2011.

The following table summarizes the restructuring accrual activity (in thousands):

	Employee Severance and Benefits			Facility- Related Costs			Total
Balance at September 30, 2008	$	—		$	—		$	—
Accruals during the year		513			1,250			1,763
Cash payments		(513	)		(295	)		(808	)
Balance at September 30, 2009	$	—		$	955		$	955
Accruals during the year		818			488			1,306
Cash payments		(814	)		(264	)		(1,078	)
Balance at September 30, 2010	$	4		$	1,179		$	1,183
Accruals during the year		2,181			62			2,243
Cash payments		(1,455	)		(991	)		(2,446	)
Balance at September 30, 2011	$	730		$	250		$	980

The charges above have been shown separately as restructuring charges on the consolidated statements of operations. The remaining accrual relates to the fiscal 2011 and 2010 restructurings and is expected to be paid within the next 27 months. As such, the current portion totaling $0.9 million is recorded as a current liability within other current liabilities and the long-term portion totaling $0.1 million is recorded as a long-term liability within other long-term liabilities on the consolidated balance sheet at September 30, 2011.