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Note 10 - FC1/FC2 Transition - Restructuring Costs
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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| Restructuring and Related Cost, Description |
NOTE
10 – FC1/FC2
Transition - Restructuring Costs
On
August 5, 2009, the Company announced to its U.K. employees
that the Company would evaluate the future of its U.K.
facility following the decision of two of its largest
customers to switch their purchases from the first generation
product, FC1, manufactured in the U.K. facility, to the
second generation product, FC2, which is manufactured in
Malaysia. As is required by British labor law, the Company
went through an evaluation process, working in tandem with
employee representatives, in which various manufacturing
alternatives were considered. As the process
failed to identify a satisfactory alternative, the
facility’s manufacturing operations ceased in October
2009, when the final FC1 orders were shipped. The
evaluation process concluded in late November 2009, when
employees received their termination payments.
The
Company evaluated, measured and recognized the restructuring
costs under the guidance of ASC Topic 420, Exit or
Disposal Cost Obligations, and recognized such costs in the
period incurred. The costs associated with this
restructuring fall under the scope of associated costs of an
exit activity, as suggested by the Interpretive Response in
Staff Accounting Bulletin Topic 5(P)(4), including footnote
17. The FC1/FC2 transition was completed in fiscal
year 2010, so there are no restructuring costs in fiscal year
2011. The components of the restructuring costs
recognized for the three and nine months ended June 30, 2010
were as follows:
Although
FC1 production ceased in October 2009, the Company continues
to conduct significant operating activities in the
U.K. Such activities include global sales and
marketing of the FC2 female condom, management and direction
of Global Manufacturing Operations (including production
planning, inventory management, quality assurance and quality
control, finished goods release, and compliance with good
manufacturing practices), relationships with regulatory
agencies world-wide, oversight of the Global Technical
Support Team and new product development.
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