Restructuring

9 Months Ended

Sep. 30, 2021

Restructuring and Related Activities [Abstract]

RESTRUCTURING

In the first quarter of 2020, our Board of Directors approved a global restructuring plan (the “Restructuring Plan”), which is intended to support our strategic plan in an effort to improve operating performance and ensure that we are appropriately structured and resourced to deliver increased and sustainable value to our shareholders and customers. Key activities under the Restructuring Plan include a continued focus on efficiency and cost-saving efforts, which includes decreasing total headcount by approximately 500 employees upon the completion of the Restructuring Plan.

These activities are expected to be substantially completed by the end of the first half of 2022. Pre-tax charges of approximately $49 million were recorded in the fourth quarter of 2019 in connection with the implementation of our new strategic plan and included the following:

•$21.2 million impairment of goodwill;

•$12.8 million charge, increasing our reserve for excess and obsolete inventory;

•$10.5 million impairment of intangible assets associated with recent acquisitions;

•$1.4 million impairment of intangible assets related to capitalized patents;

•$3.4 million impairment of other assets and other charges.

In connection with the Restructuring Plan, we recorded a pre-tax charge of approximately $15.8 million during the year ended December 31, 2020 primarily consisting of severance and related benefits, professional fees and other related charges and costs including a non-cash expense of $0.4 million related to the disposal of our Photonics business and 3D Design related assets. We received $0.7 million in cash payments for the disposal of our Photonics business and 3D Design related assets in the second quarter of 2020. We are continuing to execute our cost reduction initiatives to achieve our 20% target EBITDA margins that could result in additional pre-tax charges in the range of $5 million to $15 million through the end of the first half of fiscal year 2022.

On July 15, 2021, we entered into a manufacturing services agreement (the “Agreement”) with Sanmina Corporation (“Sanmina”), in connection with the Restructuring Plan. Under the Agreement, Sanmina will provide manufacturing services for the Company’s measurement device products currently manufactured by the Company at the Company’s Lake Mary, Florida, Exton, Pennsylvania, and Stuttgart, Germany manufacturing sites. A phased transition to a Sanmina production facility is expected to be completed by the end of the second quarter of 2022 as part of our cost reduction initiative. The Company expects to incur a cash charge of approximately $2 million in the fourth quarter of 2021, primarily consisting of professional fees and other related charges, and approximately $4 million in fiscal year 2022, primarily consisting of severance and related benefits.

Actual results, including the costs of the Restructuring Plan, may differ materially from our expectations, resulting in our inability to realize the expected benefits of the Restructuring Plan and our new strategic plan and negatively impacting our ability to execute our future plans and strategies, which could have a material adverse effect on our business, financial condition and results of operations.

In connection with the Restructuring Plan, we paid $13.1 million during the year ended December 31, 2020 and $4.5 million during the nine months ended September 30, 2021, primarily consisting of severance and related benefits. Activity related to the accrued restructuring charge and cash payments for the nine months ended September 30, 2021 was as follows:


	Severance and other benefits		Professional fees and other related charges		Total
Balance at December 31, 2020	$	1,481	$	867	$	2,348
Additions charged to expense	2,515		1,164		3,679
Cash payments	(2,784)		(1,750)		(4,534)
Balance at September 30, 2021	$	1,212	$	281	$	1,493


Balance at February 14, 2020	$	—	$	—	$	—
Additions charged to expense	11,633		2,580		14,213
Cash payments	(8,265)		(2,518)		(10,783)
Balance at September 30, 2020	$	3,368	$	62	$	3,430