11. RESTRUCTURING

In accordance with the provisions of Topic 420, Exit or Disposal Cost Obligation, to the FASB ASC, the Company recognizes certain costs associated with headcount reductions, office vacancies and other costs to move or relocate operations or employees as restructuring costs in the period in which such actions are initiated and approved by management or the obligations are incurred, as applicable.

As of July 31, 2014, the Company’s restructuring accrual represents obligations related to remaining lease and property tax payments associated with the Company’s decision to vacate facilities during the fiscal years ended July 31, 2014 and 2009, as well as severance obligations payable related to headcount reductions from actions undertaken during fiscal 2014.

In the fiscal year ended July 31, 2009, the Company vacated certain facilities in an effort to consolidate operations and align the Company’s capacity after the merger with Credence. During fiscal 2014, the Company recognized expense of $0.3 million as a result of modifying sublease assumptions for its facility accrual associated with its Milpitas, California location. As of July 31, 2014 and 2013, the accrual for the previously restructured facility leases was $2.1 million and $2.8 million, respectively. This includes $1.1 million and $1.8 million, respectively, of long-term payments to be made for the remainder of the respective lease terms, the longest of which is through 2017. This liability is included in other long term liabilities on the Company’s consolidated balance sheets. The remainder of the accrual of $1.0 million is included in other accrued expenses on the Company’s consolidated balance sheets as of July 31, 2014 and 2013, respectively.

On January 30, 2014, the Company announced a strategic restructuring plan in connection with ongoing efforts to reduce costs and maximize efficiencies in connection with the Dover Acquisition. The Company recorded restructuring expense of $3.5 million during fiscal 2014 related to headcount reductions in connection with the implementation of the restructuring plan.

On April 30, 2014, the Company ceased use of its Beaverton, Oregon facility. All operations that had occurred at that location have been transferred to other locations in North America. During fiscal 2014, the Company recorded $0.1 million as restructuring expense, net of assumptions for sublease income, related to remaining lease payments on the Beaverton, Oregon facility.

The following table sets forth the Company’s restructuring accrual activity for the three years ended July 31, 2014:


	Severance Costs			Facility Leases			Total
	(in thousands)
Balance July 31, 2011	$	6		$	4,761		$	4,767
Restructuring expense		812			291			1,103
Accretion		—			182			182
Stock based compensation		(84	)		—			(84	)
Cash paid		(371	)		(1,537	)		(1,908	)

Balance July 31, 2012	$	363		$	3,697		$	4,060
Restructuring expense		216			260			476
Accretion		—			229			229
Stock based compensation		(47	)		—			(47	)
Cash paid		(530	)		(1,414	)		(1,944	)

Balance July 31, 2013	$	2		$	2,772		$	2,774
Balance assumed from Dover acquisition		447			—			447
Restructuring expense		3,534			410			3,944
Accretion		—			274			274
Cash paid		(3,562	)		(1,325	)		(4,887	)

Balance July 31, 2014	$	421		$	2,131		$	2,552