Restructuring

9 Months Ended

Oct. 01, 2023

Restructuring and Related Activities [Abstract]

Restructuring

RESTRUCTURING

Fiscal 2023 Restructuring Plans

In July 2023, we adopted a restructuring plan to align operating costs with current market conditions driven by slower sales partly due to higher interest rates. The plan was intended to improve near-term financial strength in order to remain competitive for future market conditions. As part of the restructuring plan, approximately 140 employees, representing approximately 5% of our labor costs, exited the business in the third quarter of fiscal 2023. We expect to incur restructuring charges totaling approximately $4.8 million, consisting primarily of severance benefits.

In September 2023, we adopted another restructuring plan with similar intentions to improve near-term financial strength in order to remain competitive for future market conditions. As part of the restructuring plan, approximately 55 employees exited the business in the third quarter of fiscal 2023. We expect to incur restructuring charges totaling approximately $1.0 million, consisting primarily of severance benefits.

As of October 1, 2023, we had incurred cumulative costs of approximately $5.9 million in restructuring charges, primarily relating to the payment of severance benefits. The July 2023 restructuring plan is substantially completed, with the only remaining activities on the plan relating to severance payments for certain employees retained through the end of the fiscal year. The September 2023 restructuring plan is expected to be completed by the fourth quarter of fiscal 2023. As a result of these restructuring activities, we expect to realize cost reductions over the next 12 months of approximately $20.6 million primarily in cost of revenues and selling, general, and administrative expenses.

The following table summarizes the restructuring charges for the July 2023 and September 2023 restructuring plans recognized in our condensed consolidated statements of operations:

	Nine Months Ended
(In thousands)	October 1, 2023		Cumulative To Date
July 2023 Restructuring Plan:
Severance and benefits	$	4,667	$	4,667
Other costs	159		159
Total July 2023 Restructuring Plan	4,826		4,826
September 2023 Restructuring Plan:
Severance and benefits	959		959
Other costs	88		88
Total September 2023 Restructuring Plan	1,047		1,047
Total restructuring charges (credits)	$	5,873	$	5,873

The following table summarizes the restructuring reserve activities during the nine months ended October 1, 2023:

	Nine Months Ended
(In thousands)	July 2, 2023		Charges (Benefits)		(Payments) Recoveries		October 1, 2023
July 2023 Restructuring Plan:
Severance and benefits	$	—	$	4,667	$	(4,167)	$	500
Other costs	—		159		—		159
Total July 2023 Restructuring Plan	—		4,826		(4,167)		659
September 2023 Restructuring Plan:
Severance and benefits	—		959		(32)		927
Other costs	—		88		—		88
Total September 2023 Restructuring Plan	—		1,047		(32)		1,015
Total restructuring reserve activities	$	—	$	5,873	$	(4,199)	$	1,674