Severance, Restructuring, and Acquisition Integration Activities

6 Months Ended

Jun. 28, 2020

Restructuring and Related Activities [Abstract]

Severance, Restructuring, and Acquisition Integration Activities

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 $3.5 million and $3.0 million of severance and other restructuring costs for this program during the three and six months ended June 28, 2020, respectively. 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 $22.0 million for this program.

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 $0.9 million and $3.1 million of severance and other restructuring costs for this program during the three and six months ended June 28, 2020, respectively. We recognized $2.5 million of severance and other restructuring costs for this program during the three and six months ended June 30, 2019. These costs were incurred by the Enterprise Solutions segment. We expect to incur incremental costs of approximately $1.5 million for this program.

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 and six months ended June 28, 2020 and June 30, 2019:

	Severance		Other Restructuring and Integration Costs		Total Costs
Three Months Ended June 28, 2020	(In thousands)
Enterprise Solutions	$	1,467	$	956	$	2,423
Industrial Solutions	1,773		276		2,049
Total	$	3,240	$	1,232	$	4,472
Three Months Ended June 30, 2019
Enterprise Solutions	$	—	$	2,519	$	2,519
Industrial Solutions	—		—		—
Total	$	—	$	2,519	$	2,519
Six Months Ended June 28, 2020
Enterprise Solutions	$	835	$	4,138	$	4,973
Industrial Solutions	818		2,300		3,118
Total	$	1,653	$	6,438	$	8,091
Six Months Ended June 30, 2019
Enterprise Solutions	$	—	$	2,519	$	2,519
Industrial Solutions	—		—		—
Total	$	—	$	2,519	$	2,519

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.  

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:

	Three Months Ended				Six Months Ended
	June 28, 2020		June 30, 2019		June 28, 2020		June 30, 2019
	(In Thousands)
Cost of sales	$	92	$	300	$	137	$	300
Selling, general and administrative expenses	4,380		2,219		7,954		2,219
Total	$	4,472	$	2,519	$	8,091	$	2,519

Accrued Severance

The table below sets forth severance activity that occurred for the Cost Reduction Program as well as the SPC, Opterna and FutureLink Integration Program described above. The balances below are included in accrued liabilities (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
New charges	4,660
Cash payments	(4,795)
Foreign currency translation	(132)
Other adjustments	(1,420)
Balance at June 28, 2020	$	11,698

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.