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Severance, Restructuring, and Acquisition Integration Activities | 6 Months Ended
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Jul. 03, 2016
Restructuring and Related Activities [Abstract] |
Severance, Restructuring, and Acquisition Integration Activities | Note 7: Severance, Restructuring, and Acquisition Integration Activities Industrial Restructuring Program Both our Industrial Connectivity and Industrial IT segments have been negatively impacted by a decline in sales volume. Global demand for industrial products has been negatively impacted by the strengthened U.S. dollar and lower energy prices. Our customers have reduced capital spending in response to these conditions, and we expect these conditions to continue to negatively impact our industrial segments’ sales volume. In response to these industrial market conditions, we began to execute a restructuring program in the fourth quarter of 2015 to reduce our cost structure. We recognized $2.4 million and $5.8 million of severance and other restructuring costs for this program during the three and six months ended July 3, 2016, respectively. We expect to incur approximately $2 million of additional severance and other restructuring costs for this program, the majority of which will be incurred in the third quarter of 2016. We expect the restructuring program to generate approximately $18 million of savings on an annualized basis, which we began to realize in the first quarter of 2016. Industrial Manufacturing Footprint Program In further response to the industrial market conditions described above, in the first quarter of 2016 we began a program to further consolidate our manufacturing footprint. The manufacturing consolidation is expected to be completed by the end of 2017. We recognized $2.0 million and $2.5 million of severance and other restructuring costs for this program during the three and six months ended July 3, 2016, respectively. The costs were incurred by the Enterprise and Industrial Connectivity segments, as the manufacturing locations involved in the program serve both platforms. We expect to incur approximately $16 million and $15 million of additional severance and other restructuring costs for this program in 2016 and 2017, respectively. We expect the program to generate approximately $10 million of savings on an annualized basis, beginning in the second half of 2017. Grass Valley Restructuring Program Our Broadcast segment’s Grass Valley brand was negatively impacted by a decline in global demand of broadcast technology infrastructure products. Outside of the U.S., demand for these products was impacted by the relative price increase of products due to the strengthened U.S. dollar as well as the impact of weaker economic conditions which have resulted in lower capital spending. Within the U.S., demand for these products was impacted by deferred capital spending. We believe broadcast customers have deferred their capital spending as they navigate through a number of important industry transitions and a changing media landscape. In response to these broadcast market conditions, we began to execute a restructuring program beginning in the third quarter of 2015 to further reduce our cost structure. We recognized $0.9 million and $5.0 million of severance and other restructuring costs for this program during the three and six months ended July 3, 2016, respectively. We expect to incur approximately $1 million of additional severance and other restructuring costs for this program, the majority of which will be incurred in the third quarter of 2016. We expect the restructuring program to generate approximately $30 million of savings on an annualized basis, which we began to realize in the fourth quarter of 2015. Productivity Improvement Program and Acquisition Integration In 2014, we began a productivity improvement program and the integration of our acquisition of Grass Valley. The productivity improvement program 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 related to the Industrial Connectivity, Enterprise, and Industrial IT segments. The restructuring and integration activities related to our acquisition of Grass Valley focused on achieving desired cost savings by consolidating existing and acquired operating facilities and other support functions. We substantially completed the productivity improvement program and the acquisition integration activities in 2015. In the three and six months ended June 28, 2015, we recorded severance, restructuring, and integration costs of $4.9 million and $19.4 million, respectively, related to these two significant programs, as well as other cost reduction actions and the integration of our acquisitions of ProSoft, Coast, and Tripwire. In the three and six months ended July 3, 2016, we recognized $0.6 million and $1.0 million of costs, respectively, primarily related to our 2016 acquisition of M2FX. The following table summarizes the costs by segment of the various programs described above:
Three Months Ended July 3, 2016 |  | Severance |  |  | Other Restructuring and Integration Costs |  |  | Total Costs |
|  | (In thousands) |
Broadcast Solutions |  | $ | (109) |  |  | $ | 1,428 |  |  | $ | 1,319 |
Enterprise Connectivity Solutions |  |  | 71 |  |  |  | 1,136 |  |  |  | 1,207 |
Industrial Connectivity Solutions |  |  | 1,180 |  |  |  | 1,191 |  |  |  | 2,371 |
Industrial IT Solutions |  |  | 309 |  |  |  | 634 |  |  |  | 943 |
Network Security Solutions |  |  | - |  |  |  | 29 |  |  |  | 29 |
Total |  | $ | 1,451 |  |  | $ | 4,418 |  |  | $ | 5,869 |
Three Months Ended June 28, 2015 |  |  |  |  |  |  |  |  |
Broadcast Solutions |  | $ | (1,590) |  |  | $ | 4,873 |  |  | $ | 3,283 |
Enterprise Connectivity Solutions |  |  | 22 |  |  |  | 61 |  |  |  | 83 |
Industrial Connectivity Solutions |  |  | 526 |  |  |  | 637 |  |  |  | 1,163 |
Industrial IT Solutions |  |  | - |  |  |  | - |  |  |  | - |
Network Security Solutions |  |  | - |  |  |  | 378 |  |  |  | 378 |
Total |  | $ | (1,042) |  |  | $ | 5,949 |  |  | $ | 4,907 |
Six Months Ended July 3, 2016 |  |  |  |  |  |  |  |  |
Broadcast Solutions |  | $ | (751) |  |  | $ | 6,448 |  |  | $ | 5,697 |
Enterprise Connectivity Solutions |  |  | 76 |  |  |  | 1,631 |  |  |  | 1,707 |
Industrial Connectivity Solutions |  |  | 1,777 |  |  |  | 1,459 |  |  |  | 3,236 |
Industrial IT Solutions |  |  | 2,631 |  |  |  | 977 |  |  |  | 3,608 |
Network Security Solutions |  |  | - |  |  |  | 29 |  |  |  | 29 |
Total |  | $ | 3,733 |  |  | $ | 10,544 |  |  | $ | 14,277 |
Six Months Ended June 28, 2015 |  |  |  |  |  |  |  |  |
Broadcast Solutions |  | $ | 713 |  |  | $ | 14,097 |  |  | $ | 14,810 |
Enterprise Connectivity Solutions |  |  | 72 |  |  |  | 579 |  |  |  | 651 |
Industrial Connectivity Solutions |  |  | 967 |  |  |  | 1,969 |  |  |  | 2,936 |
Industrial IT Solutions |  |  | (740) |  |  |  | 688 |  |  |  | (52) |
Network Security Solutions |  |  | - |  |  |  | 1,045 |  |  |  | 1,045 |
Total |  | $ | 1,012 |  |  | $ | 18,378 |  |  | $ | 19,390 |
Of the total severance, restructuring, and acquisition integration costs recognized in the three months ended July 3, 2016, $1.8 million, $3.6 million, and $0.5 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 June 28, 2015, $1.8 million, $2.7 million, and $0.4 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 six months ended July 3, 2016, $3.9 million, $9.7 million, and $0.7 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 six months ended June 28, 2015, $3.2 million, $14.5 million, and $1.7 million were included in cost of sales; selling, general and administrative expenses; and research and development, respectively. 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. We continue to review our business strategies and evaluate potential new restructuring actions. This could result in additional restructuring costs in future periods. Accrued Severance The table below sets forth the significant severance activity that occurred for two of the programs described above. The balances are included in accrued liabilities.
|  | Grass Valley Restructuring |  |  | Industrial Restructuring |
|  | (In thousands) |
Balance at December 31, 2015 |  | $ | 12,076 |  |  | $ | 2,947 |
New charges |  |  | 886 |  |  |  | 2,919 |
Cash payments |  |  | (4,404) |  |  |  | (1,967) |
Foreign currency translation |  |  | 167 |  |  |  | 94 |
Other adjustments |  |  | (1,528) |  |  |  | - |
Balance at April 3, 2016 |  | $ | 7,197 |  |  | $ | 3,993 |
New charges |  |  | 251 |  |  |  | 1,489 |
Cash payments |  |  | (3,356) |  |  |  | (1,685) |
Foreign currency translation |  |  | (13) |  |  |  | (42) |
Other adjustments |  |  | (360) |  |  |  | - |
Balance at July 3, 2016 |  | $ | 3,719 |  |  | $ | 3,755 |
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. We expect the majority of the liabilities for these programs to be paid during the second half of 2016.

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4) -URI http://asc.fasb.org/extlink&oid=27011515&loc=d3e140904-122747 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 5.P.3) -URI http://asc.fasb.org/extlink&oid=27011515&loc=d3e140864-122747 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 + Details
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