Note 4 - Restructuring Charges

12 Months Ended

Dec. 28, 2024

Notes to Financial Statements

Restructuring and Related Activities Disclosure [Text Block]

4. Restructuring Charges

Poway Volume Manufacturing Transition

During the fourth quarter of fiscal 2024, we made the decision to transition all remaining volume manufacturing out of Poway, CA, and consolidate it into our factories in Asia. This change will allow us to better utilize our corporate infrastructure, drive improvements in inventory management, optimize our warehousing and better support our long-term goals. Total pretax charges related to the Poway volume manufacturing transition for the twelve months ended December 28, 2024 were not material.

MCT Integration Program

During fiscal 2023, we began a strategic restructuring and integration program in connection with the acquisition of MCT (“MCT Integration Program”). As part of the MCT Integration Program, we consolidated MCT’s Penang, Malaysia manufacturing operations into Cohu’s Melaka, Malaysia manufacturing operations by the end of fiscal 2023. Relating to the facility consolidation actions, we notified certain impacted employees of a reduction in force program and the facility consolidation and reduction in force programs are being implemented as part of a comprehensive review of our operations and are intended to reduce our operating cost structure and capitalize on acquisition synergies.

As a result of the activities described above, we recognized total pretax charges of $2.4 million during the twelve months ended December 30, 2023, that are within the scope of ASC 420. Total pretax charges during the twelve months ended December 28, 2024 were not material.

Charges related to the MCT Integration Program for the year ended December 30, 2023, were as follows:

(in thousands)	2023
Employee severance costs	$	2,159
Other restructuring costs		262
Total	$	2,421

Costs associated with restructuring activities are presented in our consolidated statements of operations as restructuring charges. Other restructuring costs include facility closure and manufacturing software integration costs.

The following table summarizes the activity within the restructuring related accounts for the MCT Integration Program during the year ended December 30, 2023 (in thousands):

	Employee Severance			Other Exit Costs			Total
Balance, December 31, 2022	$	-		$	-		$	-
Costs accrued		2,159			262			2,421
Amounts paid or charged		(2,091	)		(262	)		(2,353	)
Balance, December 30, 2023	$	68		$	-		$	68

Xcerra Integration Program

Subsequent to the acquisition of Xcerra, during the fourth quarter of 2018, we began a strategic restructuring program designed to reposition our organization and improve our cost structure as part of our targeted integration plan regarding the recently acquired Xcerra (“Xcerra Integration Program”). As part of the Xcerra Integration Program we consolidated our global handler and contactor manufacturing operations and closed our manufacturing operations in Penang, Malaysia and Fontana, California in 2019.

In 2019, we began the Xcerra Integration Program of our German operations and entered a social plan with the German labor organization representing certain of the employees of our wholly owned subsidiary, Multitest elektronische Systeme GmbH. During the fourth quarter of 2020 we implemented a voluntary program and termination agreements with certain employees of our wholly owned subsidiary, Cohu GmbH. These programs collectively reduced headcount, enabled us to consolidate the facilities of our multiple operations located near Kolbermoor and Rosenheim, Germany, as well as transitioned certain manufacturing to other lower cost regions. The facility consolidations and reduction in force programs were implemented as part of a comprehensive review of our operations and are intended to streamline and reduce our operating cost structure and capitalize on acquisition synergies. As of December 31, 2022, restructuring activities associated with the Xcerra Integration Program were materially complete. Certain end of life inventory adjustments have continued during the fiscal years 2023 and 2024.

As a result of the activities described above, we recognized total pretax (credits)/charges of $(0.1) million and $0.2 million for the years ended December 30, 2023 and December 31, 2022, respectively, that are within the scope of ASC 420. Total pretax charges during the twelve months ended December 28, 2024 were not material.

All costs of the Xcerra Integration Program were incurred by our Semiconductor Test & Inspection segment.

Charges related to the Xcerra Integration Program for the years ended December 28, 2024, December 30, 2023 and December 31, 2022, were as follows (in thousands):

(in thousands)	2024			2023			2022
Employee severance costs	$	-		$	-		$	(8	)
Inventory related charges (adjustments)		(465	)		(62	)		(454	)
Other restructuring costs		-			-			613
Total	$	(465	)	$	(62	)	$	151

Costs associated with restructuring activities were presented in our consolidated statements of operations as restructuring charges, except for certain costs associated with inventory charges related to the decision to end manufacturing of certain of Xcerra’s semiconductor test handler products, which were classified within cost of sales. During the twelve-month period December 28, 2024, our restructuring activities included the reversal of certain inventory related charges taken in prior periods. Other restructuring costs include expenses for professional fees associated with employee severance, impairments of fixed assets and facility closure costs.

The following table summarizes the activity within the restructuring related accounts for the Xcerra Integration Program during the year ended December 31, 2022 (in thousands):

	Employee Severance			Other Exit Costs			Total
Balance, December 25, 2021		348			-			348
Costs accrued		(8	)		613			605
Amounts paid or charged		(331	)		(613	)		(944	)
Impact of currency exchange		(9	)		-			(9	)
Balance, December 31, 2022	$	-		$	-		$	-

At December 28, 2024, our total accrual for restructuring related items for the Poway volume manufacturing transition, MCT and Xcerra integration programs is reflected within current liabilities in our consolidated balance sheets as these amounts are expected to be paid out in fiscal 2025. The estimated costs associated with the employee severance and facility consolidation actions are not material and will be paid predominantly in cash.