Costs Associated with LED Business Restructuring Costs Associated with LED Business Restucturing

12 Months Ended

Jun. 28, 2015

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

Costs Associated with LED Business Restructuring

In June 2015, the Company’s Board of Directors approved a plan to restructure the LED Products business. Due to recent LED market trends that have resulted in higher LED average selling price erosion than previously forecasted and the continued under-utilization of the Company’s LED factory, the restructuring is expected to reduce excess capacity and overhead in order to improve the cost structure moving forward. The primary components of the restructuring include the planned sale or abandonment of certain manufacturing equipment, facility consolidation and the elimination of certain positions. Additionally, the Company increased LED reserves to reflect the more aggressive pricing environment experienced in the fourth quarter of fiscal 2015, and to factor in a more conservative pricing outlook for fiscal 2016.

The following table summarizes the actual and planned charges incurred through June 28, 2015 (in thousands):

Capacity and overhead cost reductions	Estimated charges		Amounts incurred through June 28, 2015		Affected Line Item in the Consolidated Statements of (Loss)Income
Loss on disposal or impairment of long-lived assets	$	59,487	$	42,716	Loss on disposal or impairment of long-lived assets
Severance expense	2,145		2,019		Sales, general and administrative expenses
Lease termination and facility consolidation costs	2,682		1,246		Sales, general and administrative expenses
Increase in channel inventory reserves	26,479		26,479		Revenue, net
Increase in inventory reserves	11,091		11,091		Cost of revenue, net
Total restructuring charges	$	101,884	$	83,551

The Company anticipates that the remaining restructuring charges will be recognized in the first half of fiscal 2016.

In the table above, the lease termination costs relate to the relocation of certain manufacturing operations from a leased facility in Huizhou, China to a company-owned facility which is also in Huizhou, China. In June 2015, the Company ceased using the leased facility and recognized a $0.5 million charge for the lease contract termination cost.

In the table above, the severance expense relates to a reduction in manufacturing and support positions. There is not a significant retention period for impacted employees.

The following table presents the changes in the severance liability under the LED Products restructuring plan (in thousands):

Severance liability at June 30, 2014	$	—
Severance expense	2,019
Severance payments	—
Severance liability at June 28, 2015	$	2,019