NOTE 17. RESTRUCTURING
2011 Restructuring
Restructuring charges in 2011 related to the previously announced integration and consolidation of our manufacturing operations, sales organization and corporate headquarters. Manufacturing operations for our Systems business were consolidated at our Dresden, Germany facility, and manufacturing operations for our Probes business, as well as our corporate headquarters, were consolidated at one of our Beaverton, Oregon facilities. As of December 31, 2011 these restructuring and consolidation activities were substantially complete and we do not expect to incur additional restructuring charges in 2012 related to these activities. In the first quarter of 2011, we recorded a net reversal of restructuring charges of $0.1 million related to termination and severance related charges. The restructuring accrual recorded during 2011 related to lease abandonment includes a $1.0 million reclassification from the straight-line lease accrual.
2010 Restructuring
Subsequent to the acquisition of SUSS Test in January 2010, we began to restructure and integrate the combined businesses, which resulted in severance charges and inventory write-offs. In the second quarter of 2010, we restructured our sockets business in Minnesota, which resulted in severance charges, inventory write-offs and shorter useful lives of certain equipment. Our sales offices in Vermont and Arizona were closed in the fourth quarter of 2010.
Summary
Restructuring charges were as follows (in thousands):
| Year Ended December 31, | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
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Termination and severance related |
$ | (70 | ) | $ | 1,307 | $ | — | |||||
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Inventory charges on discontinued products |
— | 1,076 | — | |||||||||
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Equipment write-downs |
— | 224 | — | |||||||||
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Lease abandonment and termination |
3,488 | 77 | — | |||||||||
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| $ | 3,418 | $ | 2,684 | $ | — | |||||||
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Restructuring costs were included in our Consolidated Statements of Operations as follows (in thousands):
| Year Ended December 31, | ||||||||||||
| 2011 | 2010 | 2009 | ||||||||||
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Cost of sales |
$ | 140 | $ | 1,359 | $ | — | ||||||
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Research and development |
— | 127 | — | |||||||||
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Selling, general and administrative |
3,278 | 1,198 | — | |||||||||
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| $ | 3,418 | $ | 2,684 | $ | — | |||||||
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The following tables summarize the charges, expenditures and write-offs and adjustments related to our restructuring accruals (in thousands):
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Year Ended December 31, 2011 |
Beginning Accrued Liability |
Charged to (Reversed from) Expense, Net |
Expend- itures |
Write-Offs and Adjust- ments |
Ending Accrued Liability |
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Termination and severance related |
$ | 276 | $ | (70 | ) | $ | (207 | ) | $ | 11 | $ | 10 | ||||||||
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Lease abandonment |
34 | 3,488 | (420 | ) | 1,035 | 4,137 | ||||||||||||||
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| $ | 310 | $ | 3,418 | $ | (627 | ) | $ | 1,046 | $ | 4,147 | ||||||||||
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Year Ended December 31, 2010 |
Beginning Accrued Liability |
Charged to Expense, Net |
Expend- itures |
Write-Offs and Adjust- ments |
Ending Accrued Liability |
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Termination and severance related |
$ | — | $ | 1,307 | $ | (1,222 | ) | $ | 191 | $ | 276 | |||||||||
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Inventory related to discontinued products |
— | 1,076 | — | (1,076 | ) | — | ||||||||||||||
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Equipment write-downs |
— | 224 | — | (224 | ) | — | ||||||||||||||
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Lease abandonment and termination |
— | 77 | (43 | ) | — | 34 | ||||||||||||||
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| $ | — | $ | 2,684 | $ | (1,265 | ) | $ | (1,109 | ) | $ | 310 | |||||||||
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We expect all accrued termination and severance-related costs will be paid by the end of 2012 and the lease abandonment costs will be paid by the end of 2015.