Note 7: Severance, Restructuring, and Acquisition Integration Activities

In 2014, we began a productivity improvement program and the integration of our acquisition of Grass Valley. The productivity improvement program is focused on improving the productivity of our sales, marketing, finance, and human resources functions relative to our peers. The majority of the costs for the productivity improvement program relate to the Industrial Connectivity, Enterprise, and Industrial IT segments. The restructuring and integration activities related to our acquisition of Grass Valley are focused on achieving desired cost savings by consolidating existing and acquired operating facilities and other support functions. The Grass Valley costs relate to our Broadcast segment.

In the three months ended March 29, 2015 and March 30, 2014, we recorded severance, restructuring, and integration costs of $14.5 million and $2.3 million related to these two significant programs, as well other cost reduction actions and the integration of our acquisitions of ProSoft, Coast, and Tripwire. The following table summarizes the costs by segment:


Three Months Ended March 29, 2015	Severance		Other Restructuring and Integration Costs		Total Costs
	(In thousands)

Broadcast Solutions	$	2,303	$	9,235	$	11,538
Enterprise Connectivity Solutions		50		507		557
Industrial Connectivity Solutions		441		1,332		1,773
Industrial IT Solutions		(740)		688		(52)
Network Security Solutions		-		667		667

Total	$	2,054	$	12,429	$	14,483


Three Months Ended March 30, 2014	Severance		Other Restructuring and Integration Costs		Total Costs
	(In thousands)

Broadcast Solutions	$	1,283	$	470	$	1,753
Enterprise Connectivity Solutions		-		139		139
Industrial Connectivity Solutions		-		283		283
Industrial IT Solutions		-		120		120

Total	$	1,283	$	1,012	$	2,295

Of the total severance, restructuring, and acquisition integration costs recognized in the three months ended March 29, 2015, $1.4 million, $11.8 million, and $1.3 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 March 30, 2014, $1.9 million and $0.4 million were included in selling, general and administrative expenses and research and development, respectively.

The other restructuring and integration costs primarily consisted of costs of integrating manufacturing operations, such as relocating inventory on a global basis, retention bonuses, relocation, travel, reserves for inventory obsolescence as a result of product line integration, costs to consolidate operating and support facilities, 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 table below sets forth severance activity that occurred for the two significant programs described above. The balances are included in accrued liabilities.


	Productivity Improvement Program		Grass Valley Integration
	(In thousands)

Balance at December 31, 2013 and March 30, 2014	$	-	$	-

New charges		10,507		16,528
Cash payments		(1,774)		(4,497)
Foreign currency translation		(62)		82

Balance at June 29, 2014	$	8,671	$	12,113

New charges		2,575		1,536
Cash payments		(1,171)		(3,746)
Foreign currency translation		(381)		(191)
Other adjustments		(1,697)		(1,900)

Balance at September 28, 2014	$	7,997	$	7,812

New charges		3,048		1,761
Cash payments		(2,244)		(4,699)
Foreign currency translation		(465)		(218)
Other adjustments		(1,195)		-

Balance at December 31, 2014	$	7,141	$	4,656

New charges		887		2,164
Cash payments		(1,455)		(2,370)
Foreign currency translation		(367)		(302)
Other adjustments		-		-

Balance at March 29, 2015	$	6,206	$	4,148

The other adjustments in 2014 were due to changes in estimates, including an impact of forfeited severance amounts. We expect the majority of the liabilities for these programs to be paid in the first half of fiscal 2015.

We expect to incur additional severance, restructuring, and acquisition integration costs in 2015 of approximately $12 million as a result of the activities discussed above.

We continue to review our business strategies and evaluate potential new restructuring actions. This could result in additional restructuring costs in future periods.