Restructuring and Other Charges

12 Months Ended

Dec. 29, 2019

Restructuring and Related Activities [Abstract]

RESTRUCTURING AND OTHER CHARGES

For fiscal years 2019, 2018, and 2017 the Company recorded restructuring, asset impairment, and other charges of $12.9 million, $20.5 million, and $7.3 million, respectively, in the consolidated statements of operations. The 2019 charge of $12.9 million includes $5.0 million of other non-cash charges unrelated to the 2019 exit activity and a net $1.0 million reduction in restructuring costs related to the 2018 restructuring plan. As of December 29, 2019 the total restructuring reserve was $11.4 million for both the 2019 and 2018 restructuring plans. Below is a discussion of restructuring activities by year.

2019 Restructuring Plan

On December 23, 2019, the Company committed to a new restructuring plan that continues to focus on efforts to improve efficiencies and decrease costs across its worldwide operations, and more closely align its operating structure with its business strategy. The plan involved a reduction of approximately 105 employees and early termination of two office leases. As a result of this plan, the Company recorded a pre-tax restructuring charge in the fourth quarter of 2019 of approximately $9.0 million. The charge is comprised of severance expenses ($8.8 million) and lease exit costs ($0.2 million.)

The restructuring plan is expected to result in future cash expenditures of approximately $9.0 million for payment of the employee severance and lease exit costs, as described above. The Company expects to complete the restructuring plan in fiscal year 2020, and expects the plan to yield annualized savings of approximately $6.0 million. A portion of the annualized savings is expected to be realized on the income statement in fiscal year 2020, with the remaining portion of the annualized savings expected to be realized in fiscal year 2021.

A summary of the 2019 restructuring activities is presented below:



	Charged to Expenses 2019		Deductions 2019		Charged to Other Accounts 2019		Balance at December 29, 2019

Workforce Reduction	$	8,827	$	193	$	—	$	8,634
Other Exit Costs	188		—		49		139
Total	$	9,015	$	193	$	49	$	8,773

Other Non-Cash Charges

On December 23, 2019, unrelated to the restructuring activity discussed above, the Company recorded other non-cash charges of approximately $5.0 million primarily related to adjusting the carrying value of certain insurance related assets. These charges are recorded in restructuring and other charges in the 2019 consolidated statement of operations.

2018 Restructuring Plan

On December 29, 2018, the Company committed to a new restructuring plan in its continuing efforts to improve efficiencies and decrease costs across its worldwide operations, and more closely align its operating structure with its business strategy. The plan involved (i) a restructuring of its sales and administrative operations in the United Kingdom, (ii) a reduction of approximately 200 employees, primarily in the Europe and Asia-Pacific geographic regions, and (iii) the write-down of certain underutilized and impaired assets that include information technology assets and obsolete manufacturing equipment.

As a result of this plan, the Company recorded a pre-tax restructuring and asset impairment charge in the fourth quarter of 2018 of approximately $20.5 million. The charge was comprised of severance expenses (approximately $10.8 million), impairment of assets (approximately $8.6 million) and other items (approximately $1.1 million). The charge was expected to result in future cash expenditures of $12.0 million, primarily for severance payments (approximately $10.8 million). The restructuring plan was substantially completed at the end of fiscal 2019. The Company redeployed essentially all of the anticipated savings toward the funding of sales and strategic growth initiatives, yielding negligible net savings on the Company’s income statement.

In the third quarter of 2019, the Company recorded $0.7 million of restructuring charges related to additional lease exit costs in connection with the restructuring plan announced on December 29, 2018. In the fourth quarter of 2019, the Company adjusted its previously recorded severance expenses in connection with the 2018 restructuring plan and recognized a reduction in restructuring costs of $1.7 million in 2019.

A summary of these 2018 restructuring activities is presented below:



	Balance at Beginning of Year		Deductions 2019		Charged to Expenses 2019			Balance at December 29, 2019
	(in thousands)
Workforce Reduction	$	10,763	$	7,122	$	(1,743	)	$	1,898
Other Exit Costs	1,144		1,042		672			774
Total	$	11,907	$	8,164	$	(1,071	)	$	2,672

2016 Restructuring Plan and 2017 Charge

In the fourth quarter of 2016, the Company committed to a separate restructuring plan. The plan involved (i) a substantial restructuring of the FLOR business model that included closure of its headquarters office and most retail FLOR stores, (ii) a reduction of approximately 70 FLOR employees and a number of employees in the commercial carpet tile business, primarily in the Americas and Europe regions, and (iii) the write-down of certain underutilized and impaired assets that included information technology assets, intellectual property assets, and obsolete manufacturing, office and retail store equipment. As a result of this plan, the Company incurred pre-tax restructuring and asset impairment charges of $19.8 million in the fourth quarter of 2016 and $7.3 million in the first quarter of 2017. This plan was completed at the end of fiscal year 2018.