Note 7 – Costs Associated with Exit and Restructuring Activities

In December 2012, we began a plan, “2012 restructuring plan” to restructure our Location Solutions business management structure. We also announced a project to further optimize our manufacturing operations, which includes the consolidation and relocation of support functions.

During the third quarter of 2012, revenue from our Location Solutions business fell below plan, because of slower than anticipated shipments to the automotive and process manufacturing industries, and weakness in sales to the government sector. As a result, we initiated the Locations Solutions 2012 restructuring plan.

In the second quarter of 2013 management determined that additional restructuring actions would be required to meet our financial goals for the Location Solutions business.

During 2007, Zebra began a plan to outsource printer manufacturing to a third-party manufacturer. We completed the conversion to outsourcing in 2010. During the fourth quarter of 2012, we determined that further supply chain cost reductions were possible by moving certain supply chain support operations closer to the contract printer manufacturing facility, which is located in China.

The costs below incurred through December 31, 2012, represent the costs related to the restructuring of our Location Solutions business management structure. Costs incurred for 2013 and costs expected to be incurred relate to the following: restructuring of Zebra’s manufacturing operations; relocation of a significant portion of Zebra’s supply chain operations from the U.S. to China; consolidating activities domestically; restructuring of our sales operations; restructuring certain corporate functions; and amending the Location Solutions “2012 restructuring plan” by adding additional restructuring charges to be incurred.

There were no exit and restructuring costs for the three and nine months ended September 29, 2012. Exit and restructuring costs for 2013 are as follows:


	Three Months Ended September 28, 2013			Nine Months Ended September 28, 2013
Severance, stay bonuses, and other employee-related expenses	$	440		$	3,338
Professional services		91			157
Relocation and transition costs		(12	)		20

Total	$	519		$	3,515

As of September 28, 2013, we have incurred the following exit and restructuring costs related to the Location Solutions business management structure and manufacturing operations relocation and restructuring (in thousands):


Type of Cost	Cost incurred through December 31, 2012		Costs incurred for the nine months ended September 28, 2013		Total costs incurred as of September 28, 2013		Additional costs expected to be incurred		Total costs expected to be incurred
Severance, stay bonuses, and other employee-related expenses	$	960	$	3,338	$	4,298	$	2,286	$	6,584
Professional services		0		157		157		0		157
Relocation and transition costs		0		20		20		150		170

Total	$	960	$	3,515	$	4,475	$	2,436	$	6,911

Liabilities and expenses below relate to the 2011 and 2012 exit and restructuring plans (in thousands):


	Nine Months Ended
	September 28, 2013			September 29, 2012
Balance at beginning of period	$	967		$	1,048
Charged to earnings		3,515			0
Cash paid		(3,962	)		(872	)

Balance at the end of period	$	520		$	176

Liabilities related to exit and restructuring activities are included in the accrued liabilities line item on the balance sheet. All exit costs are included in operating expenses under the line item exit and restructuring costs.