Restructuring and Other Costs

3 Months Ended

Jul. 03, 2020

Restructuring and Related Activities [Abstract]

Our restructuring and other costs consist primarily of severance, contract cancellations, separation, and other related costs. Severance costs generally include severance payments, outplacement services, health insurance coverage, and legal costs. Included in other exit and disposal costs are advisory fees incurred in connection with restructuring events. Separation costs primarily consist of consulting costs incurred in connection with our divestitures.

November 2019 Plan

In November 2019, our Board of Directors approved a restructuring plan (the November 2019 Plan) in connection with the strategic decision to divest our Enterprise Security business. Actions under this plan include the reduction of our workforce by approximately 3,100 employees, as well as asset write-offs and impairments, contract terminations, facilities closures, and the sale of underutilized facilities. As of July 3, 2020, we estimate that we will incur total costs of $550 million, excluding stock-based

compensation expense, in connection with the November 2019 Plan, of which up to $225 million is expected to consist of cash expenditures for severance and termination benefits and up to $110 million is expected to consist of cash expenditures for contract terminations. Non-cash costs are estimated to be up to $240 million related to asset write-offs and other restructuring costs. These actions are expected to be substantially completed by September 2020. As of July 3, 2020, we have incurred costs of $463 million under the November 2019 Plan.

In connection with the Broadcom sale, our Board of Directors also approved an equity-based severance program under which certain equity awards held by certain terminated employees were accelerated. As of July 3, 2020, we have incurred $124 million of stock-based compensation related to our equity-based severance program. See Note 14 for more information on the impact of this program.

Restructuring and other costs summary

Our restructuring and other costs attributable to continuing operations are presented in the table below:


	Three Months Ended
(In millions)	July 3, 2020		July 5, 2019
Severance and termination benefit costs	$	14	$	12
Contract cancellation charges	48		—
Stock-based compensation charges	7		—
Asset write-offs and impairment	55		—
Other exit and disposal costs	3		1
Total restructuring and other costs	$	127	$	13

In connection with the agreement to sell certain assets of our Enterprise Security business, a portion of our restructuring and other costs were classified to discontinued operations for all periods presented. Our restructuring and other costs attributable to discontinued operations are presented in the table below:


	Three Months Ended
(In millions)	July 3, 2020		July 5, 2019
Severance and termination benefit costs	$	37	$	12
Separation costs	1		—
Total restructuring and other costs	$	38	$	12

Restructuring summary

Our activities related to our November 2019 Plan are presented in the table below:


(In millions)	Liability Balance as of April 3, 2020		Net Charges		Cash Payments		Non-Cash Items		Liability Balance as of July 3, 2020
Severance and termination benefit costs	$	35	$	51	$	(32)	$	—	$	54
Contract cancellation charges	7		48		(4)		(35)		16
Stock-based compensation charges	—		7		—		(7)		—
Asset write-offs and impairments	—		55		—		(55)		—
Other exit and disposal costs	—		3		(3)		—		—
Total	$	42	$	164	$	(39)	$	(97)	$	70

The restructuring liabilities are included in Other current liabilities in our Condensed Consolidated Balance Sheets.