3. Restructuring and Other Charges

On January 31, 2013, management initiated a restructuring plan that is designed to align expenses with revenue. Tellabs discontinued the development of the 9200 product and reducing operating expenses. The pretax charges for this plan will consist of approximately $15 million for workforce reductions of approximately 255 employees, $18 million for facility- and asset-related charges, and $4 million for software license and other contract cancellations. Restructuring expense for this plan for the third quarter of 2013 was $0.8 million, which consists of a reduction of expense of $0.5 million for severance-related charges and charges of $1.3 million for facility- and asset-related charges. Restructuring expense for this plan for the first nine months of 2013 was $37.1 million, which consists of $15.6 million for severance-related charges, $17.3 million for facility- and asset-related charges, and $4.2 million for other obligations. By segment, total charges to date under this plan are $0.9 million for Optical, $35.8 million for Data, and $0.4 million for Services. Estimated cash payments under this plan are expected to be $22.1 million, of which $16.0 million has been paid through the third quarter of 2013. Other than the cash payments, actions under this plan are expected to be substantially completed by the end of the fourth quarter of 2013.

On October 24, 2012, management initiated a restructuring plan that is designed to further align expenses with revenue and current market conditions. In order to reduce costs and operating expenses, this plan includes moving certain functions to lower cost geographies. The pretax charges will consist of approximately $8 million for severance-related charges that will affect approximately 165 employees, and $1 million for facility- and asset-related charges. A reduction of restructuring expense for this plan for the third quarter of 2013 was $0.8 million, which consists of a reduction of expense of $0.9 million for severance-related charges and a charge of $0.1 million for facility- and asset-related charges. Restructuring expense for this plan for the first nine months of 2013 was negligible, which consists of a reduction of expense of $0.4 million for severance-related charges and charges of $0.4 million for facility- and asset-related charges. Cumulative restructuring charges for this plan are $9.4 million, which consists of $8.8 million for severance-related charges and $0.6 million for facility- and asset-related charges. By segment, total charges to date under this plan are $3.1 million for Optical, $2.3 million for Data, $0.6 million for Access, and $3.4 million for Services. Estimated cash payments under this plan are expected to be $8.7 million, of which $6.6 million has been paid through the third quarter of 2013. Other than the cash payments, actions under this plan are expected to be substantially completed by the end of the fourth quarter of 2013.

On January 30, 2012, management initiated a restructuring plan that aligns expenses with revenue. Tellabs stopped new development on the Tellabs^® SMARTCORE 9100 series for mobile packet core and consolidated research and development into fewer locations. Restructuring expense for this plan for the third quarter of 2013 was $0.1 for severance-related charges. A reduction in expense for this plan for the first nine months of 2013 was $2.4 million, which consists of reductions of $0.1 million for workforce adjustments and $2.3 million for facility- and asset-related charges. Cumulative restructuring charges for this plan are $106.4 million, which consists of $23.0 million for severance-related charges, $34.5 million for facility- and asset-related charges, $47.7 million for the accelerated amortization of abandoned intangible assets, and $1.2 million for other obligations. By segment, total charges to date under this plan are $3.1 million for Optical, $99.6 million for Data, $1.5 million for Access, and $2.2 million for Services. Estimated cash payments under this plan have been $28.7 million through the third quarter of 2013. Remaining cash payments are expected to be offset by future sub-lease receipts. Other than the cash payments, actions under this plan were completed in the first quarter of 2013.

There was no restructuring expense for previous restructuring plans for the third quarter of 2013. Restructuring expense for the first nine months of 2013 was $0.6 million, which consists of a reduction of expense of $0.2 million for severance-related charges, charges of $0.7 million for facility- and asset-related charges and $0.1 million of other obligations.

The balance for restructuring plans relates to net lease obligations that expire through 2017 and cash severance that we expect to pay through the first quarter of 2015.

The following table summarizes restructuring and other charges recorded for the plans mentioned above, as well as adjustments to reserves recorded for prior restructurings:


	Third Quarter					Nine Months
	9/27/13			9/28/12		9/27/13		9/28/12
Severance and other termination benefits	$	(1.3	)	$	2.3	$	14.9	$	24.4
Facility and other exit costs		1.4			1.0		16.1		36.9
Accelerated amortization of intangible assets		—			—		4.3		47.7
Other obligations		—			—		—		1.2

Total restructuring and other charges	$	0.1		$	3.3	$	35.3	$	110.2

The following table summarizes restructuring and other charges activity by segment for the third quarter and the first nine months of 2013 and the status of the reserves at September 27, 2013:


			Third Quarter Activity
	Balance at 6/28/13		Restructuring Expense			Cash Payments			Other Activities¹			Balance at 9/27/13
2013 Restructuring Plan
Optical	$	0.3	$	(0.1	)	$	(0.2	)	$	—		$	—
Data		9.0		0.9			(2.9	)		(1.3	)		5.7
Access		—		—			—			—			—
Services		—		—			—			—			—

Subtotal 2013 Restructuring Plan		9.3		0.8			(3.1	)		(1.3	)		5.7


2012 Restructuring Plans
Optical		1.4		(0.4	)		(0.4	)		0.1			0.7
Data		2.7		(0.2	)		(1.6	)		(0.1	)		0.8
Access		0.7		(0.2	)		(0.1	)		—			0.4
Services		1.3		0.1			(0.9	)		—			0.5

Subtotal 2012 Restructuring Plans		6.1		(0.7	)		(3.0	)		—			2.4


Previous Restructuring Plans
Optical		0.7		(0.2	)		(0.3	)		—			0.2
Data		2.4		0.1			(0.6	)		—			1.9
Access		0.7		0.1			(0.3	)		—			0.5
Services		—		—			—			—			—

Subtotal Previous Restructuring Plans		3.8		—			(1.2	)		—			2.6


Total All Restructuring Plans	$	19.2	$	0.1		$	(7.3	)	$	(1.3	)	$	10.7


			Nine Months Activity
	Balance at 12/28/12		Restructuring Expense			Cash Payments			Other Activities¹			Balance at 9/27/13
2013 Restructuring Plan
Optical	$	—	$	0.9		$	(0.9	)	$	—		$	—
Data		—		35.8			(14.7	)		(15.4	)		5.7
Access		—		—			—			—			—
Services		—		0.4			(0.4	)		—			—

Subtotal 2013 Restructuring Plan		—		37.1			(16.0	)		(15.4	)		5.7


2012 Restructuring Plans
Optical		3.9		(0.8	)		(2.5	)		0.1			0.7
Data		8.6		(1.9	)		(5.5	)		(0.4	)		0.8
Access		1.5		(0.3	)		(0.8	)		—			0.4
Services		2.8		0.6			(2.9	)		—			0.5

Subtotal 2012 Restructuring Plans		16.8		(2.4	)		(11.7	)		(0.3	)		2.4


Previous Restructuring Plans
Optical		0.6		0.1			(0.5	)		—			0.2
Data		3.1		0.4			(1.6	)		—			1.9
Access		1.4		0.1			(1.0	)		—			0.5
Services		—		—			—			—			—

Subtotal Previous Restructuring Plans		5.1		0.6			(3.1	)		—			2.6


Total All Restructuring Plans	$	21.9	$	35.3		$	(30.8	)	$	(15.7	)	$	10.7

¹	Other activities include accelerated depreciation of property, plant and equipment to be disposed, the effects of currency translation as well as other changes that do not flow through restructuring expense.