Restructuring Charges

9 Months Ended

Sep. 27, 2020

Restructuring and Related Activities [Abstract]

On May 26, 2020, the Company's Board of Directors approved a restructuring plan intended to reduce the Company's operating costs, optimize its business model, and address the impact of the COVID-19 pandemic. The restructuring plan included a global workforce reduction of approximately 8% and office closures.

The Company estimates the total restructuring charges from these actions to be approximately $15,388,000, of which $14,798,000 was recorded in the second quarter and $251,000 was recorded in the third quarter of 2020 and are included in “Restructuring charges” on the Consolidated Statements of Operations. The remaining charges are expected to be recognized during the fourth quarter of 2020.

The following table summarizes the restructuring charges (in thousands):


	Total Amount Expected to be Incurred		Incurred in the Three-months Ended September 27, 2020		Incurred in the Nine-months Ended September 27, 2020
One-time termination benefits	$	10,503	$	(36)	$	10,350
Contract termination costs	4,099		104		4,099
Other associated costs	786		183		600
	$	15,388	$	251	$	15,049

One-time termination benefits include severance, health insurance, and outplacement services for 181 employees who were either terminated during the second quarter of 2020, or were notified during the second quarter of 2020 that they would be terminated at a future date. For employees not required to render service beyond a minimum retention period, the one-time termination benefits were recognized in the second quarter of 2020. Otherwise, these benefits, including retention bonuses for selected employees, are being recognized over the service period, which is not expected to exceed the fourth quarter of 2020.

Contract termination costs include remaining lease liability obligations and operating lease asset impairments for offices closed prior to the end of the contractual lease term. These costs also include the write-off of leasehold improvements and other equipment related to these abandoned offices that had no alternative use. These contract termination costs were primarily recognized in the second quarter of 2020 when the Company ceased using the property for economic benefit. Other associated costs primarily include legal fees related to the employee termination actions, which are being recognized when the services are performed.

The following table summarizes the activity in the Company’s restructuring reserve, which is included in “Accrued expenses” on the Consolidated Balance Sheets (in thousands):


	One-time Termination Benefits		Contract Termination Costs		Other Associated Costs		Total
Balance as of December 31, 2019	$	—	$	—	$	—	$	—
Restructuring charges	11,117		3,995		600		15,712
Cash payments	(8,133)		(230)		(412)		(8,775)
Non-cash restructuring charges	—		(3,145)		—		(3,145)
Restructuring adjustments	(767)		104		—		(663)
Foreign exchange rate changes	158		13		17		188
Balance as of September 27, 2020	$	2,375	$	737	$	205	$	3,317

Restructuring adjustments related to one-time termination benefits consisted primarily of the favorable true-up of severance estimates based on final agreements and health insurance estimates based on employee elections. Adjustments related to contract termination costs consisted primarily of lease early termination fees.