Reorganization and Realignment Costs

6 Months Ended

Jun. 28, 2020

Restructuring and Related Activities [Abstract]

Reorganization and Realignment Costs

The following is a summary of the initiatives included in “Reorganization and realignment costs:”


	Three Months Ended						Six Months Ended
	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
IT realignment	$	2,847	$	—	$	6,406	$	—
G&A realignment	64		3,517		331		4,299
System optimization initiative	—		53		84		69
Reorganization and realignment costs	$	2,911	$	3,570	$	6,821	$	4,368

Information Technology (“IT”) Realignment

In December 2019, our Board of Directors approved a plan to realign and reinvest resources in the Company’s IT organization to strengthen its ability to accelerate growth. The Company is partnering with a third-party global IT consultant on this new structure to leverage their global capabilities, which the Company believes will enable a more seamless integration between its digital and corporate IT assets. The Company expects that the realignment plan will reduce certain employee compensation and other related costs that the Company intends to reinvest back into IT to drive additional capabilities and capacity across all of its technology platforms. Additionally, in June 2020, the Company made changes to its leadership structure that included the creation of a Chief Information Officer position and the elimination of the Chief Digital Experience Officer position. As a result, the Company now expects to incur total costs aggregating approximately $16,000 to $17,000 related to the plan. During the six months ended June 28, 2020, the Company recognized costs totaling $6,406, which primarily included third-party and other costs and severance and related employee costs. The Company expects to incur additional costs aggregating approximately $1,000, comprised primarily of recruitment and relocation costs. The Company expects to recognize the majority of the remaining costs associated with the plan during the remainder of 2020.

The following is a summary of the activity recorded as a result of the IT realignment plan:


	Three Months Ended		Six Months Ended		Total Incurred Since Inception
	June 28, 2020		June 28, 2020
Severance and related employee costs	$	830	$	975	$	8,523
Recruitment and relocation costs	143		314		314
Third-party and other costs	1,874		5,117		6,503
	2,847		6,406		15,340
Share-based compensation (a)	—		—		193
Total IT realignment	$	2,847	$	6,406	$	15,533

_______________

(a) Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under our IT realignment plan.

The table below presents a rollforward of our accruals for the IT realignment plan, which are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $4,039 and $371 as of June 28, 2020, respectively.


	Balance December 29, 2019		Charges		Payments		Balance June 28, 2020
Severance and related employee costs	$	7,548	$	975	$	(4,113)	$	4,410
Recruitment and relocation costs	—		314		(314)		—
Third-party and other costs	1,076		5,117		(6,193)		—
	$	8,624	$	6,406	$	(10,620)	$	4,410

General and Administrative (“G&A”) Realignment

In May 2017, the Company initiated a plan to further reduce its G&A expenses. Additionally, in May 2019, the Company announced changes to its management and operating structure that included the creation of two new positions, a President, U.S and Chief Commercial Officer and a President, International and Chief Development Officer, and the elimination of the Chief Operations Officer position. During the six months ended June 28, 2020 and June 30, 2019, the Company recognized costs related to the plan totaling $331 and $4,299, respectively, which primarily included severance and related employee costs and share-based compensation. The Company does not expect to incur any additional material costs under the plan.

The following is a summary of the activity recorded as a result of the G&A realignment plan:


	Three Months Ended						Six Months Ended				Total Incurred Since Inception
	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
Severance and related employee costs (a)	$	(6)	$	2,130	$	146	$	2,602	$	24,384
Recruitment and relocation costs	—		482		15		596		2,531
Third-party and other costs	—		71		1		87		2,211
	(6)		2,683		162		3,285		29,126
Share-based compensation (b)	70		834		169		1,014		8,067
Termination of defined benefit plans	—		—		—		—		1,335
Total G&A realignment	$	64	$	3,517	$	331	$	4,299	$	38,528

_______________

(a) The three and six months ended June 28, 2020 includes a reversal of an accrual as a result of a change in estimate.

(b) Primarily represents incremental share-based compensation resulting from the modification of stock options in connection with the termination of employees under our G&A realignment plan.

The accruals for our G&A realignment plan are included in “Accrued expenses and other current liabilities” and “Other liabilities” and totaled $2,705 and $108 as of June 28, 2020, respectively, and $4,835 and $607 as of June 30, 2019, respectively. The tables below present a rollforward of our accruals for the plan.


	Balance December 29, 2019		Charges		Payments		Balance June 28, 2020
Severance and related employee costs	$	5,276	$	146	$	(2,671)	$	2,751
Recruitment and relocation costs	83		15		(36)		62
Third-party and other costs	—		1		(1)		—
	$	5,359	$	162	$	(2,708)	$	2,813


	Balance December 30, 2018		Charges		Payments		Balance June 30, 2019
Severance and related employee costs	$	7,241	$	2,602	$	(4,724)	$	5,119
Recruitment and relocation costs	83		596		(356)		323
Third-party and other costs	—		87		(87)		—
	$	7,324	$	3,285	$	(5,167)	$	5,442

System Optimization Initiative

The Company recognizes costs related to acquisitions and dispositions under its system optimization initiative. The Company has incurred costs of $72,365 under the initiative since inception and does not expect to incur any material additional costs under the plan.