NOTE 6. Balance Sheet Items

Inventories.

Inventories (net of reserves of $7.2 million and $7.8 million at September 26, 2015 and December 27, 2014, respectively) were as follows:


	September 26,		December 27,
(in thousands)	2015		2014
Work-in-progress	$	15,655	$	17,438
Finished goods		17,191		20,511
	$	32,846	$	37,949

Product warranties.

The Company provides a limited warranty on most of its standard products and accrues for the estimated cost at the time of shipment. The Company estimates its warranty costs based on historical failure rates and related repair or replacement costs and periodically reassess these estimates as actual warranty activities occur. The changes in the Company’s accrued warranty obligations from December 27, 2014 to September 26, 2015, and from December 28, 2013 to September 27, 2014 were as follows:


	Nine Months Ended
	September 26,		September 27,
(in thousands)	2015		2014
Balance, beginning of the period	$	1,756	$	2,163
Accrual for new warranties issued		512		371
Reduction for payments and product replacements		(372)		(533)
Adjustments related to revisions and changes in estimate of warranty accrual		(700)		(113)
Balance, end of the period	$	1,196	$	1,888

During the three months ended September 26, 2015, the Company revised its estimate of the warranty provision necessary for certain product failure obligations resulting in a reduction in warranty accrual of approximately $0.7 million as the risk of product failures associated with this provision was determined to be no longer probable. The Company’s accrual for warranty obligations is included in Accrued liabilities in the interim Condensed Consolidated Balance Sheet.

2015 Restructuring costs

During the second quarter of 2015, the Company began implementing a restructuring plan to reduce spending across the organization. This has involved a reduction in force of approximately 200 employees worldwide and other targeted spending reductions. In connection with this plan, the Company expects to incur charges of approximately $15 million to $16 million, including approximately $13 million to $14 million in charges related to employee severance and related compensation benefits and approximately $2 million in charges related to site closures, asset impairments, and completion costs. The Company expects to complete activities under its cost reduction plan by end of the fourth quarter 2016.

Restructuring costs at the end of each period were as follows:


	Three Months Ended		Nine Months Ended
	September 26,		September 26,
(in thousands)	2015		2015
Employee severance and related compensation benefits (recoveries) expense:
Cost of revenues	$	(6)	$	1,158
Research and development, net		(80)		7,864
Selling, general and administrative		16		3,993
		(70)		13,015
Site closures and asset impairments		1,165		1,165
Total restructuring costs	$	1,095	$	14,180

The following summarizes the restructuring activity for the 2015 restructuring plan:


(in thousands)	Employee severance & related benefits compensation		Site closures & assets impairment		Total
Accrued restructuring balance as of December 27, 2014	$	—	$	—	$	—
Additional accruals		13,488		1,165		14,653
Cash payments		(6,127)		(154)		(6,281)
Adjustments and non-cash charges		(921)		(792)		(1,713)
Accrued restructuring balance as of September 26, 2015	$	6,440	$	219	$	6,659

The accrued restructuring costs are expected to be settled and paid by end of the second quarter 2016 and were recorded in Accrued liabilities in the Company’s Condensed and Consolidated Balance Sheet.