4.	Restructuring Charges

Subsequent to the acquisition of Xcerra on

October 1

, during the

fourth

quarter of

2018,

we began a strategic restructuring program designed to reposition our organization and improve our cost structure as part of our targeted integration plan regarding the recently acquired Xcerra (“Integration Program”). See Note

“Business Acquisitions, Goodwill and Purchased Intangible Assets” for additional information regarding the acquisition of Xcerra. As part of the Integration Program we will consolidate our global handler and contactor manufacturing operations and expect to close our manufacturing operations in Penang, Malaysia and Fontana, California by the end of calendar year

2019.

Relating to the facility consolidation actions, we notified certain impacted employees of a reduction in force program. In the

second

quarter of

2019,

we entered into a social plan (“Plan”) with the German labor organization representing certain of the employees of our wholly owned subsidiary, Multitest elektronische Systeme GmbH, as part of our Integration Program. The Plan will reduce headcount, enable us to consolidate the facilities of our multiple operations located near Rosenheim, Germany, as well as transition certain manufacturing to other lower cost regions. The facility consolidation and reduction in force programs are being implemented as part of a comprehensive review of our operations and are intended to streamline and reduce our operating cost structure and capitalize on acquisition synergies.

As a result of the activities described above, we recognized total pretax charges of

$10.7

million for the

first

nine

months ended

September 28, 2019,

that are within the scope of ASC

420,

Exit or Disposal Cost Obligations

(“ASC

420”

). All costs of the Integration Program were, and are expected to be, incurred by our Semiconductor Test & Inspection segment.

Costs associated with restructuring activities are presented in our condensed consolidated statements of operations as restructuring charges, except for certain costs associated with inventory charges related to the decision to end manufacturing of certain of Xcerra’s semiconductor test handler products, which are classified within cost of sales. Other restructuring costs include expenses for professional fees associated with employee severance and impairments of fixed assets.

The following table summarizes the activity within the restructuring related accounts for the Integration Program during the

three

months ended

September 28, 2019

(in thousands)

	Severance and			Other Exit
	Other Payroll			Costs			Total
Balance, December 29, 2018	$	4,026		$	-		$	4,026
Costs accrued		10,167			553			10,720
Amounts paid or charged		(9,251	)		(553	)		(9,804	)
Impact of currency exchange		(137	)		-			(137	)
Balance, September 28, 2019	$	4,805		$	-		$	4,805

September 28, 2019,

our total accrual for restructuring related items is reflected within current liabilities of our condensed consolidated balance sheets as these amounts are expected to be paid out within a year. The estimated costs associated with the employee severance and facility consolidation actions will be paid predominantly in cash, with the exception of the amortization of leasehold improvements which is non-cash.