RESTRUCTURING AND RELATED COSTS

Fiscal Year 2017 Restructuring

In fiscal year 2017, we initiated a series of Test workforce reductions and facility closures intended to increase organizational effectiveness, gain manufacturing efficiencies and provide cost savings that can be reinvested in our growth initiatives. As a result, during the fourth quarter of fiscal year 2017, we recorded $2,899 of pre-tax severance and related expense and $23 of pre-tax facility closure costs. In fiscal year 2018, we expect to incur $1,000 to $3,000 of additional pre-tax severance and related expense and facility closure costs related to these actions. No cash outlay was required in fiscal year 2017. The majority of the expenses are expected to be paid in fiscal year 2018.

In an effort to reduce costs and create economic efficiencies in Sensors, we initiated plans to close our Machida, Japan sales office in the second quarter of fiscal year 2018. We incurred severance and related pre-tax expense of $121 in fiscal year 2017. The severance and related costs are expected to be paid during the second quarter of fiscal year 2018. We expect to incur additional severance of approximately $104 and $17 pre-tax expense in fiscal years 2018 and 2019, respectively, which is expected to be paid during the first quarter of fiscal year 2019.

Fiscal Year 2016 Restructuring

During the fourth quarter of fiscal year 2016, we initiated plans to reduce costs in Sensors by closing our Machida, Japan manufacturing facility in the third quarter of fiscal year 2017. We incurred severance and related pre-tax expense of $1,036 in fiscal year 2017. As of September 30, 2017, we have incurred a total of $1,964 of pre-tax expense, including $1,444 and $520 of pre-tax expense related to severance and facility closure costs, respectively. The severance and facility closing costs are expected to be paid during the first quarter of fiscal year 2018.

During the third quarter of fiscal year 2016, we initiated restructuring actions to further reduce our cost structure, primarily in our Corporate area and Test segment, through terminations, elimination of certain open positions as a result of employees leaving voluntarily throughout fiscal year 2016 and reductions in contractors. The restructuring activities resulted in severance and related pre-tax expense of $1,237 in fiscal year 2016. All severance and related costs have been paid as of September 30, 2017.

Fiscal Year 2014 Restructuring

During fiscal year 2014, we initiated workforce and other cost reduction actions at certain of our Test locations in the U.S. and Europe. As a result of these cost reduction actions, we incurred severance and related costs of $6,336 in fiscal year 2014. No restructuring expenses were recognized during fiscal years 2017, 2016 or 2015 related to these restructuring actions.

Restructuring expense included in the Consolidated Statements of Income for all restructuring actions for fiscal years 2017 and 2016 was as follows. There was no restructuring expense in fiscal year 2015.



(in thousands)	Test		Sensors		Total
Fiscal year 2017
Cost of sales	$	2,439	$	701	$	3,140
Selling and marketing	112		203		315
General and administrative	371		253		624
Research and development	—		—		—
Total restructuring expense for fiscal year 2017	$	2,922	$	1,157	$	4,079

Fiscal year 2016
Cost of sales	$	299	$	762	$	1,061
Selling and marketing	129		155		284
General and administrative	414		401		815
Research and development	5		—		5
Total restructuring expense for fiscal year 2016	$	847	$	1,318	$	2,165

Restructuring expense accruals included in the Consolidated Balance Sheets for all restructuring actions were as follows:



	2017							2016						2014
(in thousands)		Test			Sensors			MTS			Sensors			Test			Total
Balance, October 3, 2015		$	—		$	—		$	—		$	—		$	1,548		$	1,548
Restructuring expense		—			—			1,237			928			—			2,165
Payments		—			—			(1,238		)	—			(498		)	(1,736		)
Other adjustments		—			—			336			—			—			336
Currency translation		—			—			(27		)	7			3			(17		)
Balance, October 1, 2016		$	—		$	—		$	308		$	935		$	1,053		$	2,296
Restructuring expense		2,922			121			—			1,036			—			4,079
Payments		—			—			(303		)	(1,652		)	(352		)	(2,307		)
Other adjustments		(23		)	—			—			—			—			(23		)
Currency translation		—			(1		)	(5		)	(110		)	33			(83		)
Balance, September 30, 2017		$	2,899		$	120		$	—		$	209		$	734		$	3,962

Restructuring expense accruals included in the Consolidated Balance Sheets were as follows:



(in thousands)	2017		2016
Accrued payroll and related costs	$	3,485	$	1,066
Other accrued liabilities	98		520
Other long-term liabilities	379		710
Total severance and related costs	$	3,962	$	2,296