Restructuring Charges (Notes)

12 Months Ended

Oct. 03, 2020

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 exit a portion of our HPFL business and consolidate all HPFL manufacturing and engineering functions in our Tampere, Finland facility by transferring certain HPFL activities from our Hamburg, Germany

facility. In conjunction with this announcement, we recorded charges in the third and fourth quarters of fiscal 2019 totaling $19.7 million primarily related to write-offs of excess inventory, which is recorded in cost of sales, and estimated severance. We recorded charges in fiscal 2020 of $1.1 million, primarily related to accelerated depreciation and project management consulting.

We also vacated our leased facility in Santa Clara at the end of the lease term on July 31, 2020 and combined operations into our owned Santa Clara headquarters. We did not incur material expenses in fiscal 2019 related to this project. We incurred costs in fiscal 2020 of $1.5 million, primarily related to accelerated depreciation. We also incurred costs in fiscal 2020 of $0.1 million for other projects.

In the fourth quarter of fiscal 2020, we began a restructuring program in our ILS segment which includes management reorganizations, the planned closure of certain manufacturing sites, and the right-sizing of global sales, service, order admin, marketing communication and certain administrative functions, among others. In the fourth quarter of fiscal 2020, we incurred costs of $2.6 million, primarily related to severance.

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 fiscal 2020 and fiscal 2019 (in thousands):


	Severance Related		Asset Write-Offs		Other		Total
Balances, September 29, 2018	$	836	$	—	$	286	$	1,122
Provision	9,172		12,609		940		22,721
Payments and other	(1,729)		(12,609)		(1,011)		(15,349)
Balances, September 28, 2019	8,279		—		215		8,494
Provision	2,468		2,194		629		5,291
Payments and other	(8,136)		(2,194)		(614)		(10,944)
Balances, October 3, 2020	$	2,611	$	—	$	230	$	2,841

At October 3, 2020, $2.8 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 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 into our owned Santa Clara headquarters. The severance related costs in fiscal 2020 primarily related to the restructuring program that began in the fourth quarter of fiscal 2020. The severance related, asset write-offs of inventory and other costs in fiscal 2019 primarily related to the exit of a portion of our HPFL business in Hamburg, Germany. The severance related, asset write-offs of inventory and other costs in fiscal 2019 other than those related to the exit of a portion of our HPFL business in Hamburg, Germany primarily related to the consolidation of certain manufacturing sites.

By segment, $3.9 million and $21.9 million of restructuring costs were incurred in the ILS segment and $1.4 million and $0.8 million were incurred in the OLS segment in fiscal 2020 and 2019, respectively. Restructuring charges are recorded in cost of sales, research and development and selling, general and administrative expenses in our consolidated statements of operations.