Restructuring Charges

9 Months Ended

Oct. 04, 2020

Restructuring and Related Activities [Abstract]

Restructuring and Asset Impairment Charges

RESTRUCTURING CHARGES

For the nine months ended October 4, 2020, the Company recorded a reduction of $3.2 million of previously recognized restructuring charges due to changes in expected cash payments. At October 4, 2020, the aggregate restructuring reserve was $3.9 million for both the 2019 and 2018 restructuring plans. Below is a discussion of the restructuring plan 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 was comprised of severance expenses ($8.8 million) and lease exit costs ($0.2 million).

The restructuring plan is expected to result in 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 reconciliation of the 2019 plan restructuring reserve is presented below:

	BALANCE, AT DECEMBER 30, 2019		DEDUCTIONS 2020		CHARGED TO EXPENSES 2020		BALANCE, AT OCTOBER 4, 2020
	(In thousands)
Workforce Reduction	$	8,634	$	(2,648)	$	(2,234)	$	3,752
Other Exit Costs	139		(139)		—		—
Total	$	8,773	$	(2,787)	$	(2,234)	$	3,752

2018 Restructuring Plan

On December 29, 2018, the Company committed to a 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 included information technology assets and obsolete manufacturing equipment.

The restructuring plan was substantially completed at the end of the second quarter of 2020. 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.

A reconciliation of the 2018 plan restructuring reserve is presented below:

	BALANCE, AT DECEMBER 30, 2019		DEDUCTIONS 2020		CHARGED TO EXPENSES 2020		BALANCE, AT OCTOBER 4, 2020
	(In thousands)
Workforce Reduction	$	1,898	$	(1,576)	$	(223)	$	99
Other Exit Costs	774		(75)		(699)		—
Total	$	2,672	$	(1,651)	$	(922)	$	99