Severance, Restructuring, and Acquisition Integration Activities

Industrial and Network Solutions Restructuring Program: 2015-2016

Both our Industrial Solutions and Network Solutions segments were negatively impacted by a decline in sales volume in 2015. At such time, global demand for industrial products was negatively impacted by the strengthened U.S. dollar and lower energy prices. As a result, our customers reduced their capital spending. In response to these industrial market conditions, we began to execute a restructuring program in the fourth fiscal quarter of 2015 to reduce our cost structure. We recognized $2.6 million and $8.4 million of severance and other restructuring costs for this program during the three and nine months ended October 2, 2016, respectively. Most of these costs were incurred by our Network Solutions segment. We did not incur any severance and other restructuring costs for this program in 2017. To date, we have incurred a total of $13 million in severance and other restructuring costs for this program. We expect the restructuring program to generate approximately $18 million of savings on an annualized basis, and we are substantially realizing such benefits.

Industrial Manufacturing Footprint Program: 2016 - 2017

In 2016, we began a program to consolidate our manufacturing footprint. The manufacturing consolidation is expected to be completed in 2018. We recognized $10.0 million and $12.5 million of severance and other restructuring costs for this program during the three and nine months ended October 2, 2016, respectively. We recognized $11.4 million and $25.3 million of severance and other restructuring costs for this program during the three and nine months ended October 1, 2017, respectively. The costs were incurred by the Enterprise Solutions and Industrial Solutions segments, as the manufacturing locations involved in the program serve both platforms. To date, we have incurred a total of $43.1 million in severance and other restructuring costs, including manufacturing inefficiencies for this program. We expect to incur approximately $7 million of additional severance and other restructuring costs for this program over 2017 and 2018. We expect the program to generate approximately $13 million of savings on an annualized basis, which we began to realize in the third quarter of 2017.

Grass Valley Restructuring Program: 2015-2016

Our Broadcast Solutions segment’s Grass Valley brand was negatively impacted by a decline in global demand of broadcast technology infrastructure products beginning in 2015. Outside of the U.S., demand for these products was impacted by the relative price increase of products due to the strengthened U.S. dollar as well as the impact of weaker economic conditions which resulted in lower capital spending. Within the U.S., demand for these products was impacted by deferred capital spending. We believe broadcast customers deferred their capital spending as they navigated through a number of important industry transitions and a changing media landscape. In response to these broadcast market conditions, we began to execute a restructuring program beginning in the third fiscal quarter of 2015 to reduce our cost structure. We recognized $0.1 million and $5.1 million of severance and other restructuring costs for this program during the three and nine months ended October 2, 2016, respectively. We did not incur any severance and other restructuring costs for this program in 2017. To date, we have incurred a total of $34.1 million in severance and other restructuring costs for this program. We expect the restructuring program to generate approximately $30 million of savings on an annualized basis, and we are substantially realizing such benefits.

The following table summarizes the costs by segment of the various programs described above as well as other immaterial programs and acquisition integration activities:



	Severance			Other Restructuring and Integration Costs		Total Costs

Three Months Ended October 1, 2017	(In thousands)
Broadcast Solutions	$	510		$	2,546	$	3,056
Enterprise Solutions	712			5,541		6,253
Industrial Solutions	712			6,128		6,840
Network Solutions	—			530		530
Total	$	1,934		$	14,745	$	16,679
Three Months Ended October 2, 2016
Broadcast Solutions	$	(114	)	$	288	$	174
Enterprise Solutions	(21		)	5,594		5,573
Industrial Solutions	184			4,562		4,746
Network Solutions	1,103			1,199		2,302
Total	$	1,152		$	11,643	$	12,795
Nine Months Ended October 1, 2017
Broadcast Solutions	$	559		$	3,875	$	4,434
Enterprise Solutions	2,839			16,428		19,267
Industrial Solutions	865			7,442		8,307
Network Solutions	—			831		831
Total	$	4,263		$	28,576	$	32,839
Nine Months Ended October 2, 2016
Broadcast Solutions	$	(865	)	$	6,736	$	5,871
Enterprise Solutions	55			7,225		7,280
Industrial Solutions	1,961			6,021		7,982
Network Solutions	3,734			2,205		5,939
Total	$	4,885		$	22,187	$	27,072

Of the total severance, restructuring, and acquisition integration costs recognized in the three months ended October 1, 2017, $12.4 million, $4.2 million, and $0.1 million were included in cost of sales; selling, general and administrative expenses; and research and development, respectively. Of the total severance, restructuring, and acquisition integration costs recognized in the three months ended October 2, 2016, $2.9 million, $9.9 million, and $0.0 million were included in cost of sales; selling, general and administrative expenses; and research and development, respectively.

Of the total severance, restructuring, and acquisition integration costs recognized in the nine months ended October 1, 2017, $26.5 million, $6.2 million, and $0.1 million were included in cost of sales; selling, general and administrative expenses; and research and development, respectively. Of the total severance, restructuring, and acquisition integration costs recognized in the nine months ended October 2, 2016, $6.8 million, $19.6 million, and $0.7 million were included in cost of sales; selling, general and administrative expenses; and research and development, respectively.

The other restructuring and integration costs primarily consisted of non-cash pension settlement charges due in part to our restructuring activities as well as equipment transfer, costs to consolidate operating and support facilities, retention bonuses, relocation, travel, legal, and other costs. The majority of the other cash restructuring and integration costs related to these actions were paid as incurred or are payable within the next 60 days.

There were no significant severance accrual balances as of October 1, 2017 or December 31, 2016.