Restructuring and Related Charges

3 Months Ended

Sep. 27, 2014

Note 11. Restructuring and Related Charges

The Company continues to reduce costs through targeted restructuring events intended to consolidate its operations, rationalize the manufacturing of its products and align its business in response to market conditions. As of September 27, 2014, the Company’s total restructuring accrual was $21.4 million. During the three months ended September 27, 2014 and September 28, 2013, the Company recorded restructuring related expenses of $2.9 million and a benefit from restructuring activities of $0.8 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 is dependent 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 three months ended September 27, 2014, were as follows (in millions):

			Three
			Months Ended				Non-cash
	Balance		September 27,				Settlements		Balance
	June 28,		2014		Cash		and Other		September 27,
	2014		Charges		Settlements		Adjustments		2014
Fiscal 2015 Plan
CCOP Robbinsville Closure Plan	$	-	$	1.5	$	(0.2)	$	-	$	1.3
(Workforce Reduction)
Fiscal 2014 Plans
NE Realignment Plan
(Workforce Reduction)		4.6		0.3		(3.2)		-		1.7
CCOP Serangoon Closure Plan
(Workforce Reduction)		1.7		-		(0.2)		-		1.5
Shared Services Restructuring Plan
(Workforce Reduction)		1.8		-		(0.5)		-		1.3
NE Product Strategy Restructuring Plan
(Workforce Reduction)		4.4		-		(0.6)		(0.2)		3.6
NE Lease Restructuring Plan (first floor)		6.9		0.3		(0.8)		-		6.4
Central Finance and IT Restructuring Plan
(Workforce Reduction)		1.5		-		-		(0.1)		1.4
Fiscal 2013 Plans
NE Lease Restructuring Plan		2.1		(0.1)		(0.2)		-		1.8
CCOP Outsourcing Plan
(Workforce Reduction)		0.5		-		(0.1)		-		0.4
Other plans		0.2		0.4		(0.6)		-		-
Plans Prior to Fiscal 2013		2.5		0.5		(0.8)		(0.2)		2.0
Total	$	26.2	$	2.9	$	(7.2)	$	(0.5)	$	21.4

Ottawa Lease Exit Costs	$	3.1	$	-	$	(0.2)	$	(0.1)	$	2.8

As of September 27, 2014 and June 28, 2014, the Company included the long-term portion of the restructuring liability of $10.3 million and $11.7 million, respectively, as the restructuring accrual, a component under Other non-current liabilities, and the short-term portion as restructuring accrual, a 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 was included in SG&A expenses. The fair value of the remaining contractual obligations, net of sublease income is $2.8 million and $3.1 million as of September 27, 2014 and June 28, 2014 respectively. The Company included the long-term portion of the contract obligations of $1.8 million and $2.0 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 2015 Plan

CCOP Robbinsville Closure Plan

During the first quarter of fiscal 2015, Management approved a plan in the CCOP segment to optimize operations and gain efficiencies by closing the Robbinsville, New Jersey site and consolidating roles and responsibilities across North America. As a result, a restructuring charge of $1.5 million was recorded for severance and employee benefits for approximately 30 employees primarily in manufacturing, research and development (“R&D”) and SG&A functions located in North America. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the third quarter of fiscal 2015.

Fiscal 2014 Plans

NE Realignment Plan

During the fourth quarter of fiscal 2014, Management approved a plan in the NE segment to realign its operations and strategy to allow for greater investment in high-growth areas. As a result, 108 employees primarily in manufacturing, R&D and SG&A functions located in United States, Latin America, Asia and Europe were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the fourth quarter of fiscal 2015.

CCOP Serangoon Closure Plan

During the fourth quarter of fiscal 2014, Management approved a plan in the CCOP segment to close the Serangoon office located in Singapore and move to a lower cost region in order to reduce manufacturing and R&D expenses. As a result, 42 employees primarily in manufacturing and R&D functions were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the third quarter of fiscal 2015.

Shared Services Restructuring Plan

During the fourth quarter of fiscal 2014, Management approved a plan to eliminate positions and re-define roles and responsibilities in the Shared Services functions in order to reduce cost, standardize global processes and establish a more efficient organization. As a result, 46 employees primarily in the general and administrative functions located in the United States, Latin America, Asia and Europe were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the first quarter of fiscal 2016.

NE Product Strategy Restructuring Plan

During the third quarter of fiscal 2014, Management approved a plan in the NE segment to realign its services, support and product resources in response to market conditions in the mobile assurance market and to increase focus on software products and next generation solutions through acquisitions and R&D. As a result, 62 employees primarily in SG&A and manufacturing functions located in North America, Latin America, Asia and Europe were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the first quarter of fiscal 2020.

NE Lease Restructuring Plan (first floor)

During the second quarter of fiscal 2014, Management approved a plan in the NE segment to exit the remaining space in Germantown, Maryland. As of June 28, 2014, the Company exited the workspace in Germantown under the plan. The fair value of the remaining contractual obligations, net of sublease income as of September 27, 2014 was $6.4 million. Payments related to the Germantown lease costs are expected to be paid by the end of the second quarter of fiscal 2019.

Central Finance and Information Technology (“IT”) Restructuring Plan

During the second quarter of fiscal 2014, Management approved a plan to eliminate positions and re-define roles and responsibilities in the Finance and IT organization to align with the future state of the organizations under new executive management and move positions to lower-cost locations where appropriate. As a result, 22 employees primarily in SG&A functions located in North America, Asia and Europe were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the third quarter of fiscal 2022.

Fiscal 2013 Plans

NE Lease Restructuring Plan

During the fourth quarter of fiscal 2013, Management approved a plan to consolidate workspace in Germantown, Maryland and Beijing, China, primarily used by the NE segment. As of June 29, 2013, the Company exited the second floor workspace in Germantown and Beijing under the plan. The fair value of the remaining contractual obligations, net of sublease income as of September 27, 2014 was $1.8 million. Payments related to the Germantown lease costs are expected to be paid by the end of the second quarter of fiscal 2019. Final payments related to the Beijing lease costs were paid during the first quarter of fiscal 2014.

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 as part of its continuous efforts to optimize its supply chain. As a result, 45 employees primarily in manufacturing, R&D and SG&A functions located in the United States were impacted. Payments related to the remaining severance and benefits accrual are expected to be paid by the end of the third quarter of fiscal 2015.

Other Plans

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

Plans Prior to Fiscal 2013

The restructuring accrual for plans that commenced prior to fiscal year 2013 was $2.0 million. Of this amount, $0.8 million is related to severance and benefits accrual for the NE 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 2013.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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