Restructuring Charges

9 Months Ended

Jul. 04, 2020

Restructuring and Related Activities [Abstract]

RESTRUCTURING CHARGES

In the first quarter of fiscal 2017, we began the implementation of planned restructuring activities in connection with the acquisition of Rofin. The activities under this plan primarily related to the exiting of our legacy HPFL product line, change of control payments to Rofin officers, the exiting of two product lines acquired in the acquisition of Rofin, realignment of our supply chain due to segment reorganization and consolidation of sales and distribution offices as well as certain manufacturing sites. These activities resulted in charges primarily for employee termination, other exit related costs associated with the write-off of property and equipment and inventory and early lease termination costs.

In June 2019, we announced our plans to co-locate the manufacturing and engineering of our HPFL products at our Hamburg, Germany facility to our Tampere, Finland location and exit a portion of our HPFL business. In conjunction with this announcement, we recorded charges in the third quarter of fiscal 2019 of $20.9 million primarily related to write-offs of excess inventory, which is recorded in cost of sales, and estimated severance. We recorded charges in the first, second and third quarters of fiscal 2020 of $0.6 million, $0.5 million and $0.1 million, respectively, primarily related to accelerated depreciation and project management consulting.

We have also announced our intent to vacate our leased facility in Santa Clara at the end of the current lease term in calendar 2020 and combine operations at our Santa Clara headquarters. We exited this facility on July 31, 2020. We did not incur material expenses in fiscal 2019 related to this project. We incurred costs in the first, second and third quarters of fiscal 2020 of $0.2 million, $0.6 million and $0.4 million, respectively, related to this project. We also incurred costs in the first quarter of fiscal 2020 of $0.1 million for other projects.

The following table presents our current liability as accrued on our balance sheets for restructuring charges. The table sets forth an analysis of the components of the restructuring charges and payments and other deductions made against the accrual for the quarters of fiscal 2020 and 2019 (in thousands):


	Severance Related		Asset Write-Offs		Other		Total
Balances, September 28, 2019	$	8,279	$	—	$	215	$	8,494
Provision	54		599		280		933
Payments and other	(658)		(599)		(275)		(1,532)
Balances, December 28, 2019	7,675		—		220		7,895
Provision	85		915		79		1,079
Payments and other	(3,715)		(915)		(87)		(4,717)
Balances, April 4, 2020	4,045		—		212		4,257
Provision	(77)		554		41		518
Payments and other	(3,136)		(554)		(31)		(3,721)
Balances, July 4, 2020	$	832	$	—	$	222	$	1,054


	Severance Related		Asset Write-Offs		Other		Total
Balances, September 29, 2018	$	836	$	—	$	286	$	1,122
Provision	212		76		188		476
Payments and other	(447)		(76)		(244)		(767)
Balances, December 29, 2018	601		—		230		831
Provision	282		247		351		880
Payments and other	(201)		(247)		(516)		(964)
Balances, March 30, 2019	682		—		65		747
Provision	9,338		11,798		137		21,273
Payments and other	19		(11,798)		(34)		(11,813)
Balances, June 29, 2019	$	10,039	$	—	$	168	$	10,207

At July 4, 2020, $1.1 million of accrued severance related and other costs were included in other current liabilities. The asset write-offs for accelerated depreciation and other costs in the first, second and third quarters of fiscal 2020 primarily related to the exit of a portion of our HPFL business in Hamburg, Germany, and costs to vacate our leased facility in Santa Clara and combine operations at our Santa Clara headquarters. The severance related, asset write-offs of inventory and other costs in the first nine months of fiscal 2019 primarily related to the exit of a portion of our HPFL business in Hamburg, Germany.

By segment, $0.1 million and $1.3 million of restructuring costs were incurred in the ILS segment and $0.4 million and $1.2 million were incurred in the OLS segment in the three and nine months ended July 4, 2020, respectively. In the three and nine months ended June 29, 2019, all of the restructuring costs were incurred in the ILS segment and none were incurred in the OLS segment. Restructuring charges are recorded in cost of sales, research and development and selling, general and administrative expenses in our condensed consolidated statements of operations.