Severance, Restructuring, and Acquisition Integration Activities

3 Months Ended

Mar. 29, 2020

Restructuring and Related Activities [Abstract]

Severance, Restructuring, and Acquisition Integration Activities

Cost Reduction Program: 2019

During the fourth quarter of 2019, we began a cost reduction program to improve performance and enhance margins by streamlining the organizational structure and investing in technology to drive productivity. We recognized an immaterial amount associated with this program during the three months ended March 29, 2020. The cost reduction program is expected to deliver an estimated $60.0 million reduction in selling, general, and administrative expenses on an annual basis, of which $40.0 million is expected to be realized in 2020, with the full benefit materializing in 2021. We expect to incur incremental costs of approximately $20.0 million of costs for this program in 2020.

SPC, Opterna and FutureLink Integration Program: 2019

In 2019, we began a restructuring program to integrate SPC, Opterna and FutureLink with our existing businesses. The restructuring and integration activities were focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions. We recognized $2.2 million of severance and other restructuring costs for this program during the three months ended March 29, 2020. These costs were incurred by the Enterprise Solutions segment. We expect to incur incremental costs of approximately $2.5 million for this program in 2020.

The following table summarizes the costs by segment of the programs described above as well as other immaterial programs and acquisition integration activities during the three months ended March 29, 2020:


	Severance		Other Restructuring and Integration Costs		Total Costs

Three Months Ended March 29, 2020	(In thousands)
Enterprise Solutions	$	(632)	$	3,182	$	2,550
Industrial Solutions	(955)		2,024		1,069
Total	$	(1,587)	$	5,206	$	3,619

The severance costs incurred during the three months ended March 29, 2020 were offset by adjustments made during the quarter for changes in estimates primarily stemming from voluntary turnover. The other restructuring and integration costs primarily consisted of equipment transfer, costs to consolidate operating and support facilities, retention bonuses, relocation, travel, legal, and other costs. The majority of the other restructuring and integration costs related to these actions were paid as incurred or are payable within the next 60 days.

There were no material severance and restructuring costs incurred during the three months ended March 31, 2019.

The following table summarizes the costs of the various programs described above as well as other immaterial programs and acquisition integration activities by financial statement line item in the Condensed Consolidated Statement of Operations for the three months ended March 29, 2020 (in thousands):


Cost of sales	$	45
Selling, general and administrative expenses	3,574

Total	$	3,619

Accrued Severance

The table below sets forth severance activity that occurred for the Cost Reduction Program described above. We did not incur any significant severance costs for the SPC, Opterna and FutureLink Integration Program. The balances below are included in accrued liabilities.


	Cost Reduction Program
	(In thousands)

Balance at December 31, 2019	$	19,575
New charges	2,529
Cash payments	(4,483)
Foreign currency translation	(89)
Other adjustments	(4,147)
Balance at March 29, 2020	$	13,385

The other adjustments were the result of changes in estimates. We experienced higher than expected voluntary turnover, and as a result, certain approved severance actions were not taken.