RESTRUCTURING ACTIVITIES

Fiscal year 2016

San Jose Fab Shutdown

In October 2014, the Company initiated a plan to shut down its San Jose wafer fabrication facility. The Company reached the decision that it was not economically feasible to maintain this facility, which is used primarily for fab process development and low volume manufacturing, as the Company intended to utilize other resources to complete such activities in the future. This plan included cash charges related to employee severance and non-cash charges related to accelerated depreciation. This plan has been completed, and the shutdown took place in the second quarter of fiscal year 2016.

During the fiscal year ending June 25, 2016, the Company recorded accelerated depreciation charges of $41.6 million in “Cost of goods sold” and $0.4 million in “Severance and restructuring expenses” in the Consolidated Statements of Income. The sale of the San Jose wafer fabrication facility took place during the second quarter of fiscal year 2016. The cumulative costs recorded in fiscal year 2015 and 2016 to complete this restructuring plan were $100.3 million and no future restructuring costs associated with this plan is expected.

Other Plans

During the fiscal year ending June 25, 2016, the Company recorded $24.0 million in “Severance and restructuring expenses" in the Consolidated Statements of Income related to various restructuring plans designed to reduce costs. These charges were associated with continued reorganization of certain business units and functions and the planned closure of the Dallas wafer level packaging (“WLP”) manufacturing facilities. Multiple job classifications and locations were impacted by these activities.

As the Company plans to close its Dallas, Texas campus, including its WLP manufacturing facility in fiscal year 2017, the Company recorded accelerated depreciation charges of $13.0 million in “Cost of goods sold” in the Consolidated Statements of Income during the fiscal year ended June 25, 2016.

Future expected restructuring costs to be incurred with other plans is $4.7 million as of June 25, 2016.

Fiscal year 2015

San Jose Fab Shutdown

As part of the San Jose wafer fabrication facility shut down noted above, the Company recorded accelerated depreciation charges of $51.5 million in “Cost of goods sold” and $6.7 million in “Severance and restructuring expenses” in the Consolidated Statements of Income during the fiscal year ending June 27, 2015.

Other Plans

During the fiscal year ending June 27, 2015, the Company recorded $24.5 million in “Severance and restructuring expenses" included in the Consolidated Statements of Income, primarily related to employee severance costs, associated with a major reorganization of the Company's business units. Multiple job classifications and locations were impacted by this activity. This reorganization was intended to consolidate the Company's R&D and Sales functions to allow for faster investment decisions, improved R&D efficiency, and facilitate stronger collaborations between internal organizations to increase productivity, improve customer satisfaction, and fuel revenue growth.

The Company also accrued for expected losses relating to lease terminations as a result of plans to consolidate office space. The need for consolidation resulted from acquisition and relocation activities.

Fiscal year 2014

The Company's management approved and initiated plans to restructure the operations of Volterra. The total cost of the plan was $11.0 million which was recorded in Severance and restructuring expenses in the Company's Consolidated Statements of Income. Also during the fiscal year ended June 28, 2014, the Company recorded $10.8 million in Severance and restructuring expenses in the Company's Consolidated Statements of Income, primarily related to employee severance costs, associated with the reorganization of certain business units.

Restructuring Accruals

The Company has accruals for severance and restructuring payments within Accrued salary and related expenses in the accompanying Condensed Consolidated Balance Sheets. The following table summarizes changes in the accruals associated with these restructuring activities during the fiscal year ending June 25, 2016:



	Balance, June 27, 2015		Fiscal 2016								Balance, June 25, 2016
	Balance, June 27, 2015		Charges		Cash Payments			Change in Estimates			Balance, June 25, 2016
	(in thousands)

Severance - San Jose Fab Shutdown (1)	$	6,725	$	973	$	(7,166	)	$	(532	)	$	—
Severance - Other plans (1)	11,496		$	27,478	$	(27,934	)	$	(3,462	)	7,578
Total	$	18,221	$	28,451	$	(35,100	)	$	(3,994	)	$	7,578

(1) Charges and change in estimates are included in Severance and restructuring expenses in the accompanying Condensed Consolidated Statements of Income.

Change in estimate:

Due to the above mentioned restructuring activities, the Company recorded accelerated depreciation resulting from the change in estimated useful lives of certain long lived assets included in restructuring plans. In all periods that accelerated depreciation expense was recorded, this resulted in additional expense and therefore impacted operating income (loss), net income (loss) and earnings per share as presented in the table below.



	For the Years Ended
	June 25, 2016			June 27, 2015			June 28, 2014
	(in thousands, except per share data)

Operating income (loss), as reported	$	313,849		$	237,280		$	422,291
Operating income (loss), excluding accelerated depreciation expense	368,475			288,774			422,291
Effect of change in estimate	$	(54,626	)	$	(51,494	)	$	—

Net income (loss), as reported	$	227,475		$	206,038		$	354,810
Net income (loss), excluding accelerated depreciation expense	283,129			259,182			—
Effect of change in estimate	$	(55,654	)	$	(53,144	)	$	354,810

Basic earnings (loss) per share, as reported	$	0.80		$	0.73		$	1.25
Diluted earnings (loss) per share, as reported	$	0.79		$	0.71		$	1.23

Basic earnings (loss) per share, excluding accelerated depreciation expense	$	0.99		$	0.91		$	1.25
Diluted earnings (loss) per share, excluding accelerated depreciation expense	$	0.98		$	0.90		$	1.23

Effect of change in estimate - basic earnings (loss) per share	$	(0.19	)	$	(0.18	)	$	—
Effect of change in estimate - diluted earnings (loss) per share	$	(0.19	)	$	(0.19	)	$	—