Restructuring Costs

9 Months Ended

Oct. 02, 2020

Restructuring Costs [Abstract]

Restructuring Costs

RESTRUCTURING COSTS

General & Administration Expense Reduction Initiative

Following the sale of the Company's former Distribution business, the Company announced it would undertake a comprehensive review of its general and administrative functions in order to improve operational efficiency and to align the Company's costs with its revenues. The objective of the initiative is to ensure that the Company has a lean organizational structure that provides a scalable infrastructure that facilitates future growth opportunities. The Company has identified information technology functions to be outsourced, workforce reductions and other reductions in certain general and administrative expenses to be completed in 2020 to support the cost savings initiative discussed above. The Company currently expects these actions to result in approximately $3.9 million in severance costs and provide annualized cost savings of approximately $12.4 million. In accordance with ASC 712-10, Compensation - Nonretirement Postemployment Benefits, the Company recorded $0.7 million and $3.8 million in severance costs associated with these workforce reductions in the three-month and nine-month fiscal periods ended October 2, 2020, which were included in restructuring costs on the Company's Condensed Consolidated Statements of Operations. The accrual balance associated with these severance costs were included in other current liabilities on the Company's Condensed Consolidated Balance Sheets as of October 2, 2020.

In addition to the severance associated with the cost savings initiative discussed above, the Company incurred $0.5 million in severance costs as it integrates the acquisition of Bal Seal in the nine-month fiscal period ended October 2, 2020. These costs were included in restructuring costs on the Company's Condensed Consolidated Statements of Operations and the associated workforce reduction is expected to provide annual cost savings of approximately $1.2 million.

Workforce Reductions in Response to COVID-19

During the first nine months of 2020, the Company implemented workforce reductions and elected to eliminate certain open positions as a response to the unprecedented hardships brought on by COVID-19. For the three-month and nine-month fiscal periods ended October 2, 2020, the Company recorded severance costs of $0.5 million and $3.2 million, respectively, related to workforce reductions, which were included in restructuring costs on the Company's Condensed Consolidated Statements of Operations. These actions are expected to provide annualized cost savings of approximately $16.4 million.

Composites Businesses Restructuring

During the third quarter of 2017, the Company initiated restructuring activities at its composite businesses to support the ongoing effort of improving capacity utilization and operating efficiency to better position the Company for increased profitability and growth. Such actions include workforce reductions and the consolidation of operations, which began in the third quarter of 2017. The majority of these restructuring activities were completed by the end of 2019. The Company began realizing total cost savings in excess of $8.0 million annually as a result of these restructuring activities.

6. RESTRUCTURING COSTS (CONTINUED)

Composites Businesses Restructuring - continued

Since the announcement, restructuring expense associated with these activities through October 2, 2020 was $9.7 million of the total anticipated expense of $9.7 million. Expense associated with these restructuring activities was $0.4 million for the three-month and nine-month fiscal periods ended October 2, 2020. Expense associated with these restructuring activities was $0.1 million and $0.6 million for three-month and nine-month fiscal periods ended September 27, 2019. At October 2, 2020 and December 31, 2019, the Company had an accrual balance of $0.8 million and $0.4 million, respectively, included in other current liabilities, which relates to costs associated with the consolidation of facilities. During the fourth quarter, the Company settled the claim associated with its accrual at October 2, 2020.