Note 5 - Restructuring Charges

12 Months Ended

Dec. 26, 2020

Notes to Financial Statements

Restructuring and Related Activities Disclosure [Text Block]

5.     Restructuring Charges

Subsequent to the acquisition of Xcerra, 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 2, “Business Acquisitions, Goodwill and Purchased Intangible Assets” for additional information regarding this transaction. As part of the Integration Program we consolidated our global handler and contactor manufacturing operations and closed our manufacturing operations in Penang, Malaysia and Fontana, California in 2019.

In the second quarter of 2019, we began the Integration Program of our German operations and entered a social plan with the German labor organization representing certain of the employees of our wholly owned subsidiary, Multitest elektronische Systeme GmbH. During the fourth quarter of 2020 we implemented a voluntary program and termination agreements with certain employees of our wholly owned subsidiary, Cohu GmbH. These programs will collectively reduce headcount, enable us to consolidate the facilities of our multiple operations located near Kolbermoor and Rosenheim, Germany, as well as transition certain manufacturing to other lower cost regions. The facility consolidations 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 $11.4 million, $16.2 million and $37.8 million for the years ended December 26, 2020, December 28, 2019 and December 29, 2018, respectively, that are within the scope of ASC 420, Exit or Disposal Cost Obligations (“ASC 420”). Severance and other separation payments made to certain executive officers of Xcerra related to change-in-control with double trigger provisions in their existing employment agreements totaled $6.9 million in the year ended December 29, 2018. Additionally, in the year ended December 29, 2018, we incurred $8.2 million of compensation costs related to the acceleration of RSUs held by certain executive officers and the Board of Directors of Xcerra because of the change in control. This non-cash expense is included in restructuring in our consolidated statements of operations.

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

Charges related to the Integration Program for the years ended December 26, 2020, December 28, 2019 and December 29, 2018, were as follows (in thousands):

(in thousands)	2020		2019		2018
Employee severance costs	$	6,485	$	12,170	$	17,791
Inventory related charges		3,731		2,729		19,053
Other restructuring costs		1,138		1,314		913
Total	$	11,354	$	16,213	$	37,757

Costs associated with restructuring activities are presented in our 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, impairments of fixed assets and facility closure costs.

The following table summarizes the activity within the restructuring related accounts for the Integration Program during the years ended December 26, 2020 and December 28, 2019 (in thousands):

	Employee Severance			Other Exit Costs			Total
Balance, December 29, 2018	$	4,026			-			4,026
Costs accrued		12,170			1,314			13,484
Amounts paid or charged		(14,909	)		(1,314	)		(16,223	)
Impact of currency exchange		(51	)		-			(51	)
Balance, December 28, 2019		1,236			-			1,236
Costs accrued		6,485			1,138			7,623
Amounts paid or charged		(2,055	)		(1,138	)		(3,193	)
Impact of currency exchange		160			-			160
Balance, December 26, 2020	$	5,826		$	-		$	5,826

At December 26, 2020, our total accrual for restructuring related items is reflected within current liabilities in our consolidated balance sheets as these amounts are expected to be paid out in 2021. The estimated costs associated with the employee severance and facility consolidation actions will be paid predominantly in cash. All amounts accrued related to inventory will remain in our consolidated balance sheet until it is scrapped.