Note 11. Restructuring and Related Charges

The Company continues to seek to reduce costs through targeted restructuring events intended to consolidate its operations and rationalize the manufacturing of its products based on core competencies and cost efficiencies, together with the need to align its businesses with market conditions. As of March 30, 2013, the Company’s total restructuring accrual was $6.1 million. During the three and nine months ended March 30, 2013, the Company incurred restructuring expenses of $0.4 million and $6.1 million, respectively. During the three and nine months ended March 31, 2012, the Company incurred restructuring expenses of $2.0 million and $7.5 million, respectively. The Company’s restructuring charges can include severance and benefit costs to eliminate a specified number of positions, facilities and equipment costs to vacate facilities and consolidate operations, and lease termination costs. The timing of associated cash payments depend upon the type of restructuring charge and can extend over multiple periods.

Summary of Restructuring Plans

The adjustments to the accrued restructuring expenses related to all of the Company’s restructuring plans described below for the nine months ended March 30, 2013 were as follows (in millions):

			Nine									Three
			Months									Months
			Ended					Non-cash				Ended
	Balance		March 30,					Settlements		Balance		March 30,
	June 30,		2013		Cash			and Other		March 30,		2013
	2012		Charges		Settlements			Adjustments		2013		Charges
Fiscal 2013 Plans
CCOP Outsourcing Plan (Workforce reduction)	$	—	$	0.9	$	(0.2	)	$	—	$	0.7	$	0.9
CommTest Wireless Business Restructuring Plan (Workforce reduction)	—		1.8		(1.7		)	—		0.1		—
CCOP CPV Plan (Workforce reduction)	—		0.5		(0.4		)	—		0.1		(0.1		)
Fiscal 2012 Plans
CommTest Operation and Repair Outsourcing Restructuring Plan:
Workforce reduction	$	3.9	$	1.3	$	(4.6	)	$	—	$	0.6	$	(0.2	)
Facilities and equipment	—		0.8		(0.8		)	—		—		0.1
Lease costs	—		0.5		(0.4		)	0.4		0.5		—
Total CommTest Operation and Repair Outsourcing Restructuring Plan	$	3.9	$	2.6	$	(5.8	)	$	0.4	$	1.1	$	(0.1	)
OSP Business Consolidation Plan (Workforce reduction)	0.8		—		(0.8		)	—		—		—
CommTest Manufacturing Support Consolidation Plan (Workforce reduction)	2.5		0.2		(2.3		)	—		0.4		(0.3		)
CommTest Germantown Restructuring Plan (Lease costs)	0.5		—		—			—		0.5		—
Other plans	0.2		—		(0.2		)	—		—		—
Fiscal 2011 Plans
CommTest Market Rebalancing Restructuring Plan:
Workforce reduction	$	0.1	$	—	$	(0.1	)	$	—	$	—	$	—
Lease costs	1.0		—		(0.3		)	—		0.7		—
Total CommTest Market Rebalancing Restructuring Plan	$	1.1	$	—	$	(0.4	)	$	—	$	0.7	$	—
Plans Prior to Fiscal 2011	$	3.6	$	0.1	$	(1.3	)	$	0.1	$	2.5	$	—
Total	$	12.6	$	6.1	$	(13.1	)	$	0.5	$	6.1	$	0.4

Ottawa Lease Exit Costs	$	4.6	$	0.3	$	(0.9	)	$	—	$	4.0	$	0.1

As of March 30, 2013 and June 30, 2012, the Company included the long-term portion of the restructuring liability of $3.1 million and $4.0 million, respectively, as the restructuring accrual component under Other non-current liabilities, and the short-term portion as the restructuring accrual component under Other current liabilities in the Consolidated Balance Sheets.

The Company had also previously recorded lease exit charges, net of assumed sub-lease income in prior fiscal years related to its Ottawa facility, that were included in Selling, general and administrative expenses. The fair value of the remaining contractual obligations, net of sublease income, is $4.0 million and $4.6 million as of March 30, 2013 and June 30, 2012 respectively. The Company included the long-term portion of the contract obligations of $3.0 million and $3.7 million in other non-current liabilities as of each period end, and the short-term portion in other current liabilities in the Consolidated Balance Sheets. The payments related to these lease costs are expected to be paid by the end of the third quarter of fiscal 2018.

Fiscal 2013 Plans

CCOP Outsourcing Plan

During the third quarter of fiscal 2013, Management approved a plan to transition certain functions related to the CCOP segment to an offshore contract manufacturer to align with its continuous efforts for supply chain optimization. As a result, a restructuring charge of $0.9 million was recorded for severance and employee benefits for 46 employees primarily in manufacturing, research and development and selling, general and administrative functions. As of March 30, 2013, 4 employees have been terminated. The employees being affected are located in the United States. Payments related to remaining severance and benefits accrual are expected to be paid by the end of the first quarter of fiscal 2015.

CommTest Wireless Business Restructuring Plan

During the second quarter of fiscal 2013, Management approved a plan to align the Company’s investment strategy in the CommTest segment with customer spending priorities in high growth product lines such as wireless network assurance and eliminate positions in research and development, sales and operations organization that supported low growth product lines. As a result, a restructuring charge of $1.8 million was recorded for severance and employee benefits for 42 employees primarily in research and development and selling, general and administrative functions located in North America and Asia. As of March 30, 2013, 40 employees have been terminated and payments related to remaining severance and benefits accrual are expected to be paid by the end of the fourth quarter of fiscal 2013.

CCOP CPV Plan

During the first quarter of fiscal 2013, Management approved a plan to terminate the CPV product line within the CCOP segment based on limited opportunities for market growth. As a result of this plan 10 employees primarily in manufacturing, research and development and selling, general and administrative functions located in North America, Europe, and Asia were affected. During the three months ended March 30, 2013, the Company reduced the accrual by $0.1 million for severance and employee benefits due to decreased obligation of remaining payments. As of March 30, 2013, 9 employees have been terminated and payments relating to remaining severance and benefits accrual are expected to be paid by the end of the fourth quarter of fiscal 2013.

Fiscal 2012 Plans

CommTest Operation and Repair Outsourcing Restructuring Plan

During the fourth quarter of fiscal 2012, Management approved a plan which focuses on three areas in the CommTest segment: (1) moving the repair organization to a repair outsourcing partner; (2) reorganizing the R&D global team because of portfolio prioritization primarily in the Customer Experience Management (“CEM”) business to consolidate key platforms from several sites to a single site, and (3) reorganizing Global Sales to focus on strategic software growth, wireless growth and to ensure sales account resources on the most critical global growth accounts. This action will occur over the next several quarters and affected 128 employees in manufacturing, research and development and selling, general and administrative functions and resulted in the exit of workspaces in Techpoint Singapore and Atlanta, Georgia. The fair value of the remaining contractual obligations, net of sublease income as of March 30, 2013, was $0.5 million. The employees being affected are located in America, Europe and Asia. As of March 30, 2013, 117 of these employees have been terminated. During the three months ended March 30, 2013, the Company reduced the accrual by $0.2 million for severance and employee benefits due to decreased obligation of remaining payments. Payments related to the severance and benefits accrual are expected to be paid by the end of the third quarter of fiscal 2014.

OSP Business Consolidation Plan

During the fourth quarter of fiscal 2012, Management approved a plan to consolidate and re-align the various business units primarily within its OSP segment to improve synergies. As a result of this plan 15 employees in manufacturing, research and development and selling, general and administrative functions located in the United States and Europe were impacted. As of March 30, 2013, all 15 of these employees have been terminated and fully paid.

CommTest Manufacturing Support Consolidation Plan

During the third quarter of fiscal 2012, Management approved a plan to continue to consolidate its manufacturing support operations in the CommTest segment by reducing the number of contract manufacturer locations worldwide and moving most of them to lower cost regions such as Mexico and China. This action will occur over the next several quarters and affected 77 employees in manufacturing and selling, general and administrative functions. The employees being affected are located in North America, Europe and Asia. As of March 30, 2013, 62 employees have been terminated. During the three months ended March 30, 2013, the Company reduced the accrual by $0.3 million for severance and employee benefits due to decreased obligation of remaining payments. Payments related to the severance and benefits accrual are expected to be paid by the end of the first quarter of fiscal 2014.

CommTest Germantown Restructuring Plan

During the second quarter of fiscal 2012, Management approved a plan to consolidate workspace in Germantown, Maryland, primarily used by the CommTest segment. As of December 31, 2011, the Company exited the workspace in Germantown under the plan. The fair value of the remaining contractual obligations, net of sublease income as of March 30, 2013 was $0.5 million. Payments related to the lease costs are expected to be paid by the end of the second quarter of fiscal 2019.

Other plans

Other plans account for an immaterial portion of the total restructuring accrual, with minimal or no revisions recorded.

Fiscal 2011 Plans

CommTest Market Rebalancing Restructuring Plan

During the third quarter of fiscal 2011, Management approved a plan for the CommTest segment to focus on higher growth products and services in lower cost markets with higher growth potential. This resulted in termination of employment, exit of three facilities and manufacturing transfer costs. As of June 30, 2012, all employees had been terminated. The fair value of the remaining contractual obligations with respect to the facilities exited, net of sublease income as of March 30, 2013 was $0.7 million. Payments related to the lease costs are expected to be paid by the end of the second quarter of fiscal 2016.

Plans Prior to Fiscal 2011

The restructuring accrual for plans that commenced prior to fiscal year 2011 was $2.5 million. Of this amount, $1.7 million is related to severance and benefits accrual for the CommTest Germany Restructuring Plan which commenced in the fourth quarter of fiscal 2009. Payments related to the severance and benefits accrual are expected to be paid by the end of the fourth quarter of fiscal 2016. The remaining balance consists of immaterial lease obligation accruals from various restructuring plans that commenced prior to fiscal year 2011.