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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
4. Restructuring and Exit Costs (Continued)
approximately $27 million of restructuring charges associated with employee termination benefits, facility lease costs after the operations ceased,
and other exit costs, of which $8 million were incurred in fiscal year 2009. In addition, as a result of the Milpitas closure, the Company has
recorded approximately $30 million related to accelerated asset depreciation recorded as Cost of revenue in the first two quarters of fiscal year
2009.
Limavady Closure. In October 2007, the Company announced the closure of its substrate manufacturing facility in Limavady, Northern
Ireland, as part of the Company's ongoing focus on cost efficiencies in all areas of its business (the "Limavady Closure"). The Company ceased
production at its Limavady facility during September 2008 and all activities related to the closure have been completed by the end of fiscal year
2009. From plan inception through the fiscal year ended July 3, 2009, the Company has recorded approximately $45 million of restructuring
charges associated with employee termination benefits and other exit costs, of which $9 million of these costs were incurred in fiscal year 2009,
and offset by $10 million in adjustments primarily related to a reduction in required grant repayments.
Maxtor —Pursuant to EITF 95-3, Recognition of Liabilities in Connection with a Business Combination (EITF 95-3), the Company
recorded certain exit costs aggregating $265 million, of which $108 million related to employee termination benefits, $64 million related to the
planned exit of leased or owned excess facilities and $93 million related to the cancellation or settlement of contractual obligations that will not
provide any future economic benefit. The severance and associated benefits liability related to the employment termination of approximately
4,900 Maxtor employees, primarily in the U.S. and Far East, all of whom had been terminated as of June 29, 2007. The Company's payments for
severance and related benefits and for contractual settlements were substantially completed as of June 29, 2007. During the fiscal year ended
July 3, 2009, the Company recorded adjustments to previously recorded restructuring charges to reflect its revised sub-lease expectations related
to its Maxtor facilities closure of $19 million. The Company paid $7 million of the accrued exit costs during fiscal year of 2009. The remaining
balance of
92
(Dollars in millions)
Employee
Benefits
Operating
Leases
Other
Exit
Costs
Total
Site Closures
Accrual balances at June 29, 2007
$
—
—
$
—
$
—
Restructuring charges
48
—
18
66
Cash payments
—
—
—
—
Adjustments
—
—
—
—
Accrual balances at June 27, 2008
$
48
—
$
18
$
66
Restructuring charges
9
8
13
30
Cash payments
(54
)
(1
)
(22
)
(77
)
Adjustments
(1
)
—
(
9
)
(10
)
Accrual balances at July 3, 2009
$
2
$
7
$
—
$
9