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Restructuring and Related Charges

6 Months Ended

Dec. 29, 2012

Note 11. Restructuring and Related Charges

The Company continues to seek to reduce costs through targeted restructuring events intended to consolidate its operations and rationalize the manufacturing of its products based on core competencies and cost efficiencies, together with the need to align its businesses with market conditions. As of December 29, 2012, the Company’s total restructuring accrual was $9.1 million. During the three and six months ended December 29, 2012, the Company incurred restructuring expenses of $3.0 million and $5.7 million, respectively. During the three and six months ended December 31, 2011, the Company incurred restructuring expenses of $4.0 million and $5.5 million, respectively. The Company’s restructuring charges can include severance and benefit costs to eliminate a specified number of positions, facilities and equipment costs to vacate facilities and consolidate operations, and lease termination costs. The timing of associated cash payments depend upon the type of restructuring charge and can extend over multiple periods.

Summary of Restructuring Plans

The adjustments to the accrued restructuring expenses related to all of the Company’s restructuring plans described below for the six months ended December 29, 2012 were as follows (in millions):

			Six Months Ended					Non-cash				Three Months Ended
	Balance		December 29,					Settlements		Balance		December 29,
	June 30,		2012		Cash			and Other		December 29,		2012
	2012		Charges		Settlements			Adjustments		2012		Charges
CommTest Wireless Business Restructuring Plan	$	—	$	1.8	$	(1.0	)	$	—	$	0.8	$	1.8
CCOP CPV Plan	—		0.6		(0.4		)	—		0.2		—
CommTest Operation and Repair Outsourcing Restructuring Plan
Workforce Reduction	$	3.9	$	1.5	$	(3.8	)	$	—	$	1.6	$	0.6
Facilities and Equipment	—		0.7		(0.7		)	—		—		0.2
Lease Costs	—		0.5		(0.3		)	—		0.2		—
Total CommTest Operation and Repair Outsourcing Restructuring Plan	$	3.9	$	2.7	$	(4.8	)	$	—	$	1.8	$	0.8
OSP Business Consolidation Plan	0.8		—		(0.6		)	—		0.2		—
CommTest Manufacturing Support Consolidation Plan (Workforce Reduction)	2.5		0.5		(2.0		)	—		1.0		0.4
CommTest Germantown Tower Restructuring Plan (Lease Costs)	0.5		—		—			—		0.5		—
CommTest Market Rebalancing Restructuring Plan (Lease Costs)	0.9		—		(0.2		)	—		0.7		—
CommTest US Manufacturing Outsourcing Restructuring Plan (Lease Costs)	1.1		—		(0.2		)	—		0.9		—
CommTest Germany Restructuring Plan (Workforce Reduction)	2.4		0.1		(0.3		)	0.2		2.4		—
Other plans
Workforce Reduction	$	0.4	$	—	$	(0.3	)	$	—	$	0.1	$	—
Lease Costs	0.1		—		—			0.4		0.5		—
Total other plans	$	0.5	$	—	$	(0.3	)	$	0.4	$	0.6	$	—
Total	$	12.6	$	5.7	$	(9.8	)	$	0.6	$	9.1	$	3.0

Ottawa Lease Exit Costs	$	4.6	$	0.2	$	(0.6	)	$	0.1	$	4.3	$	0.1

As of December 29, 2012 and June 30, 2012, the Company included the long-term portion of the restructuring liability of $3.5 million and $4.0 million, respectively, as the restructuring accrual component under Other non-current liabilities, and the short-term portion as the restructuring accrual component under Other current liabilities in the Consolidated Balance Sheets.

The Company had also previously recorded lease exit charges, net of assumed sub-lease income in prior fiscal years related to its Ottawa facility that was included in selling, general and administrative expenses. The fair value of the remaining contractual obligations, net of sublease income, is $4.3 million and $4.6 million as of December 29, 2012 and June 30, 2012 respectively. The Company included the long-term portion of the contract obligations of $3.3 million and $3.7 million in other non-current liabilities as of each period end, and the short-term portion in other current liabilities in the Consolidated Balance Sheets. The payments related to these lease costs are expected to be paid by the end of the third quarter of fiscal 2018.

CommTest Wireless Business Restructuring Plan

During the second quarter of fiscal 2013, Management approved a plan to align the Company’s investment strategy in CommTest segment with customer spending priorities in high growth product lines such as wireless network assurance and eliminate positions in research and development, sales and operations organization that supported low growth product lines. As a result, a restructuring charge of $1.8 million was recorded for severance and employee benefits for 43 employees primarily in research and development and selling, general and administrative functions. As of December 29, 2012, 38 employees have been terminated. The employees being affected are located in North America and Asia. Payments related to remaining severance and benefits accrual are expected to be paid by the end of the fourth quarter of fiscal 2013.

CCOP CPV Plan

During the first quarter of fiscal 2013, Management approved a plan to terminate the CPV product line within the CCOP segment based on limited opportunities for market growth. This action will occur over the next several quarters and affects 10 employees in manufacturing, research and development and selling, general and administrative functions. The employees being affected are located in North America, Europe and Asia. As of December 29, 2012, 9 employees have been terminated. Payments related to remaining severance and benefits accrual are expected to be paid by the end of the third quarter of fiscal 2013.

CommTest Operation and Repair Outsourcing Restructuring Plan

During the fourth quarter of fiscal 2012, Management approved a plan which focuses on three areas in the CommTest segment: (1) moving the repair organization to a repair outsourcing partner; (2) reorganizing the R&D global team because of portfolio prioritization primarily in the Customer Experience Management (“CEM”) business to consolidate key platforms from several sites to a single site, and (3) reorganizing Global Sales to focus on strategic software growth, wireless growth, and to ensure sales account resources on the most critical global growth accounts. This action will occur over the next several quarters and affected 133 employees in manufacturing, research and development and selling, general and administrative functions. The employees being affected are located in America, Europe and Asia. As of December 29, 2012, 107 of these employees have been terminated. During the three months ended December 29, 2012, the Company adjusted the accrual for $0.6 million of additional severance and employee benefits arising from 22 employees added to the original plan. Payments related to the severance and benefits accrual are expected to be paid by the end of the third quarter of fiscal 2014.

During the fourth quarter of fiscal 2012, Management approved a plan to exit workspaces in Techpoint, Singapore and Atlanta, Georgia, primarily used by the CommTest segment. During the six months ended December 29, 2012, the Company exited both the workspaces. The fair value of the remaining contractual obligations, net of sublease income as of December 29, 2012, was $0.2 million. Payments related to the lease costs are expected to be paid by the end of the fourth quarter of fiscal 2013 and second quarter of fiscal 2014 for the leased sites in Techpoint, Singapore and Atlanta, Georgia, respectively.

OSP Business Consolidation Plan

During the fourth quarter of fiscal 2012, Management approved a plan to consolidate and re-align the various business units primarily within its OSP segment to improve synergies. This action will occur over the next several quarters and affected 16 employees primarily in manufacturing, research and development and selling, general and administrative functions. The employees being affected are located in the United States and Europe. As of December 29, 2012, 11 of these employees have been terminated. Payments related to the severance and benefits accrual are expected to be paid by the end of the third quarter of fiscal 2013.

CommTest Manufacturing Support Consolidation Plan

During the third quarter of fiscal 2012, Management approved a plan to continue to consolidate its manufacturing support operations in the CommTest segment by reducing the number of contract manufacturer locations worldwide and moving most of them to lower cost regions such as Mexico and China. This action will occur over the next several quarters and affected 80 employees in manufacturing and selling, general and administrative functions. The employees being affected are located in North America, Europe and Asia. As of December 29, 2012, 53 employees have been terminated. During the three months ended December 29, 2012, the Company adjusted the accrual for $0.4 million due to additional severance and employee benefits arising from 5 employees added to the original plan. Payments related to the severance and benefits accrual are expected to be paid by the end of the fourth quarter of fiscal 2013.

CommTest Germantown Restructuring Plan

During the second quarter of fiscal 2012, Management approved a plan to consolidate workspace in Germantown, Maryland, primarily used by the CommTest segment. As of December 31, 2011, the Company exited the workspace in Germantown under the plan. The fair value of the remaining contractual obligations, net of sublease income as of December 29, 2012 was $0.5 million. Payments related to the lease costs are expected to be paid by the end of the second quarter of fiscal 2019.

CommTest Market Rebalancing Restructuring Plan

During the third quarter of fiscal 2011, Management approved a plan for the CommTest segment to focus on higher growth products and services in lower cost markets with higher growth potential. This resulted in termination of employment, exit of three facilities and manufacturing transfer costs. As of June 30, 2012, all employees had been terminated. The fair value of the remaining contractual obligations with respect to the facilities exited, net of sublease income as of December 29, 2012 was $0.7 million. Payments related to the lease costs are expected to be paid by the end of the second quarter of fiscal 2016.

CommTest US Manufacturing Outsourcing Restructuring Plan

During fiscal 2010, the Company exited facilities in Maryland and Indiana as part of its restructuring plan in the CommTest segment to reduce and/or consolidate manufacturing locations. The fair value of the remaining contractual obligations, net of sublease income, as of December 29, 2012 was $0.9 million. Payments related to the lease costs are expected to be paid by the end of the second quarter of fiscal 2015 for its facilities in Indiana. Payments related the lease costs for its facilities in the state of Maryland were paid out as of December 31, 2011.

CommTest Germany Restructuring Plan

During the fourth quarter of fiscal 2009, the Company implemented a restructuring plan for its site in Germany in its CommTest segment to significantly change the overall cost structure and complexity of the site, and to align the cost of the site more with market demand. 77 employees in manufacturing, research and development and selling, general and administrative functions were affected by the plan. As of December 29, 2012, 74 employees have been terminated. Payments related to the severance and benefits accrual are expected to be paid by the end of the fourth quarter of fiscal 2016.

Other plans

Other plans account for a minor portion of the total restructuring accrual, with minimal or no revisions recorded.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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