Note 4 - Restructuring Charges

12 Months Ended

Dec. 30, 2023

Notes to Financial Statements

Restructuring and Related Activities Disclosure [Text Block]

4. Restructuring Charges

MCT Integration Program

During 2023, we began a strategic restructuring and integration program in connection with the acquisition of MCT (“MCT Integration Program”). As part of the MCT Integration Program, we consolidated MCT’s Penang, Malaysia manufacturing operations into Cohu’s Melaka, Malaysia manufacturing operations by the end of 2023. Relating to the facility consolidation actions, we notified certain impacted employees of a reduction in force program and the facility consolidation and reduction in force programs are being implemented as part of a comprehensive review of our operations and are intended to reduce our operating cost structure and capitalize on acquisition synergies.

As a result of the activities described above, we recognized total pretax charges of $2.4 million during the twelve months ended December 30, 2023, that are within the scope of ASC 420.

Charges related to the MCT Integration Program for the year ended December 30, 2023, were as follows:

(in thousands)	2023
Employee severance costs	$	2,159
Other restructuring costs		262
Total	$	2,421

Costs associated with restructuring activities are presented in our consolidated statements of income as restructuring charges. Other restructuring costs include facility closure and manufacturing software integration costs.

The following table summarizes the activity within the restructuring related accounts for the MCT Integration Program during the year ended December 30, 2023 (in thousands):

	Employee Severance			Other Exit Costs			Total
Balance, December 31, 2022		-			-			-
Costs accrued		2,159			262			2,421
Amounts paid or charged		(2,091	)		(262	)		(2,353	)
Impact of currency exchange		-			-			-
Balance, December 30, 2023	$	68		$	-		$	68

Xcerra Integration Program

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 (“Xcerra Integration Program”). As part of the Xcerra 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 2019, we began the Xcerra 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 collectively reduced headcount, enabled us to consolidate the facilities of our multiple operations located near Kolbermoor and Rosenheim, Germany, as well as transitioned certain manufacturing to other lower cost regions. The facility consolidations and reduction in force programs were 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 of December 31, 2022, restructuring activities associated with the Xcerra Integration Program were materially complete. Certain end of life inventory adjustment continued during the current year.

As a result of the activities described above, we recognized total pretax (credits)/charges of $(0.1) million, $0.2 million and $1.3 million for the years ended December 30, 2023 ,December 31, 2022 and December 25, 2021, respectively, that are within the scope of ASC 420.

All costs of the Xcerra Integration Program were incurred by our Semiconductor Test & Inspection segment.

Charges related to the Xcerra Integration Program for the years ended December 30, 2023, December 31, 2022 and December 25, 2021, were as follows (in thousands):

(in thousands)	2023			2022			2021
Employee severance costs		-		$	(8	)	$	1,161
Inventory related charges (adjustments)		(62	)		(454	)		(558	)
Other restructuring costs		-			613			662
Total	$	(62	)	$	151		$	1,265

Costs associated with restructuring activities were presented in our consolidated statements of income 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 were 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 Xcerra Integration Program during the years ended December 31, 2022 and December 25, 2021 (in thousands):

	Employee Severance			Other Exit Costs			Total
Balance, December 26, 2020	$	5,826		$	-		$	5,826
Costs accrued		1,161			662			1,823
Amounts paid or charged		(6,545	)		(662	)		(7,207	)
Impact of currency exchange		(94	)		-			(94	)
Balance, December 25, 2021		348			-			348
Costs accrued		(8	)		613			605
Amounts paid or charged		(331	)		(613	)		(944	)
Impact of currency exchange		(9	)		-			(9	)
Balance, December 31, 2022	$	-		$	-		$	-

At December 30, 2023, our total accrual for restructuring related items for both the MCT and Xcerra Integration Programs is reflected within current liabilities in our consolidated balance sheets as these amounts are expected to be paid out in 2024. 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.