Severance, Restructuring, and Acquisition Integration Activities

6 Months Ended

Jul. 04, 2021

Restructuring and Related Activities [Abstract]

Severance, Restructuring, and Acquisition Integration Activities

Severance, Restructuring, and Acquisition Integration Activities

Cost Reduction Program

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 $1.2 million and $3.5 million of severance and other restructuring costs for this program during the three and six months ended July 4, 2021, respectively, and $3.5 million and $3.0 million during the three and six months ended June 28, 2020, respectively. These costs were incurred by both the Enterprise Solutions and Industrial Solutions segments. The cost reduction program is expected to deliver an estimated $60 million reduction in selling, general, and administrative expenses on an annual basis. We expect to incur incremental costs of approximately $5 million for this program in 2021.

Acquisition Integration Program

We are integrating our recent acquisitions such as OTN, SPC, and Opterna with our existing businesses. The restructuring and integration activities are focused on achieving desired cost savings by consolidating existing and acquired facilities and other support functions. We recognized $0.6 million and $2.4 million of severance and other restructuring costs for this program during the three and six months ended July 4, 2021, respectively. 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. These costs were incurred by both the Enterprise Solutions and Industrial Solutions segments. We expect to incur incremental costs of approximately $2.0 million for this program in 2021.

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 July 4, 2021 and June 28, 2020:

	Severance		Other Restructuring and Integration Costs		Total Costs
Three Months Ended July 4, 2021	(In thousands)
Enterprise Solutions	$	64	$	2,396	$	2,460
Industrial Solutions	335		245		580
Total	$	399	$	2,641	$	3,040
Three Months Ended June 28, 2020
Enterprise Solutions	$	1,467	$	956	$	2,423
Industrial Solutions	1,773		276		2,049
Total	$	3,240	$	1,232	$	4,472
Six Months Ended July 4, 2021
Enterprise Solutions	$	1,108	$	3,267	$	4,375
Industrial Solutions	1,702		2,134		3,836
Total	$	2,810	$	5,401	$	8,211
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

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
	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
	(In Thousands)
Cost of sales	$	1,103	$	92	$	1,363	$	137
Selling, general and administrative expenses	1,937		4,380		6,848		7,954
Total	$	3,040	$	4,472	$	8,211	$	8,091

Accrued Severance

The table below summarizes severance activity, included in accrued liabilities, for the Cost Reduction Program and the Acquisition Integration Program discussed above for the three and six months ended July 4, 2021 and June 28, 2020, respectively.

	2021		2020
	(In thousands)
Beginning year balance	$	7,085	$	19,575
New charges	2,060		2,529
Cash payments	(1,798)		(4,483)
Foreign currency translation	49		(89)
Other adjustments	—		(4,147)
Balance at the end of Q1	7,396		13,385
New charges	458		4,660
Cash payments	(1,023)		(4,795)
Foreign currency translation	(4)		(132)
Other adjustments	(59)		(1,420)
Balance at the end of Q2	$	6,768	$	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.