NOTE 6. Balance Sheet Items

Inventories.

Inventories (net of reserves of $7.9 million and $7.8 million at June 27, 2015 and December 27, 2014, respectively) were as follows:


	June 27,		December 27,
(in thousands)	2015		2014
Work-in-progress	$	16,824	$	17,438
Finished goods		19,341		20,511
	$	36,165	$	37,949

Product warranties.

The Company provides a limited warranty on most of its standard products and accrues for the estimated cost at the time of shipment. The Company estimates its warranty costs based on historical failure rates and related repair or replacement costs and periodically reassess these estimates as actual warranty activities occur. The changes in the Company’s accrued warranty obligations from December 27, 2014 to June 27, 2015, and from December 28, 2013 to June 28, 2014 were as follows:


	Six Months Ended
	June 27,		June 28,
(in thousands)	2015		2014
Balance, beginning of the period	$	1,756	$	2,163
Accrual for new warranties issued		389		222
Reduction for payments and product replacements		(271)		(344)
Adjustments related to revisions and changes in estimate of warranty accrual		—		(88)
Balance, end of the period	$	1,874	$	1,953

The Company’s accrual for warranty obligations is included in Accrued liabilities in the interim Condensed Consolidated Balance Sheet.

2015 Restructuring costs

During the second quarter of 2015, we implemented a restructuring plan to reduce spending across the organization. This involves a reduction in force of approximately 200 employees worldwide and other targeted spending reductions. In connection with this plan, the Company expects to incur charges of approximately $15 million to $16 million, including approximately $13 million to $14 million in charges related to employee severance and related compensation benefits and approximately $2 million in charges related to site closures, asset impairments, and completion costs. The Company expects to complete activities under its cost reduction plan by end of fourth quarter 2016.

Restructuring costs at the end of each period were as follows:


	Three Months Ended
	June 27,
(in thousands)	2015
Employee severance and related compensation benefits:
Cost of revenues	$	1,164
Research and development, net		7,944
Selling, general and administrative		3,977
	$	13,085

The following summarizes the restructuring activity for the 2015 restructuring plan:



	June 27,
(in thousands)	2015
Accrued restructuring balance as of December 27, 2014	$	—
Additional accruals		13,085
Accrued restructuring balance as of June 27, 2015	$	13,085

The accrued employee severance and related compensation benefits are expected to be paid by end of fourth quarter 2015 and were recorded in Accrued liabilities in the Company’s Condensed and Consolidated Balance Sheet.