Apple 2004 Annual Report Download - page 87

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the cost of the acquired assets, would be allocated to future compensation expense in the appropriate periods over the following 3 years.
Note 5—Restructuring Charges
Fiscal 2004 Restructuring Actions
The Company recorded total restructuring charges of approximately $23 million during the year ended September 25, 2004, including
approximately $14 million in severance costs, $5.5 million in asset impairments, and a $3.5 million charge for lease cancellations. Of the
$23 million charge, $14.3 million had been spent by the end of 2004, with the remaining $8.7 million consisting of $5.2 million for employee
severance benefits and $3.5 million for lease cancellations.
During the fourth quarter of 2004, the Company recognized restructuring expense of $5.5 million. In conjunction with the European workforce
reduction during the second quarter of 2004, the Company vacated a leased sales facility during the fourth quarter of 2004 resulting in a charge
of $3.7 million for contract termination and asset impairment costs. The Company also recognized employee termination costs of $1.8 million
related to the elimination of non-essential positions, principally in Europe. In addition, the Company reversed $400,000 of excess restructuring
expense from prior periods related primarily to lower than expected disposal costs on Sacramento manufacturing-related fixed assets. The net
cost of the restructuring plans for the fourth quarter of 2004 was $5.1 million, of which $300,000 had been paid prior to the end of 2004. These
actions will result in the termination of 54 positions, 4 of which had been terminated prior to the end of 2004.
During the third quarter of 2004, the Company finalized restructuring plans related to closing Company-owned manufacturing activities in
Sacramento. In addition, the Company's management approved restructuring plans related to certain headcount reductions primarily for various
sales and marketing activities principally in the U.S. Total cost of the restructuring plan for the third quarter of 2004 was $7.9 million, of which
$7.2 million had been paid prior to the end of 2004. These actions will result in the termination of 83 positions, 77 of which had been terminated
prior to the end of 2004.
The closing of manufacturing operations in Sacramento resulted in the elimination of 67 positions for a severance cost of $1.9 million and write-
off of $5.3 million in manufacturing-related fixed assets whose use ceased during the third quarter of 2004. Termination of sales and marketing
activities, principally in the U.S., resulted in severance of $0.7 million for the elimination of 16 positions.
During the second quarter of 2004, the Company's management approved restructuring plans related to the termination of Company-owned
manufacturing activities in Sacramento and headcount reductions related primarily to various sales and marketing activities in the U.S. and
Europe. Total cost of the actions was $9.6 million for the termination of 348 positions. As of the end of the fourth quarter of 2004, $6.8 million
had been spent and 310 positions had been eliminated related to these actions.
83