Severance, Restructuring, and Acquisition Integration Activities

9 Months Ended

Sep. 27, 2020

Restructuring and Related Activities [Abstract]

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 $0.2 million and $3.2 million of severance and other restructuring costs for this program during the three and nine months ended September 27, 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 $60.0 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 $9.6 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 $4.0 million of severance and other restructuring costs for this program during the three and nine months ended September 27, 2020, respectively. We recognized $3.1 million and $5.6 million of severance and other restructuring costs for this program during the three and nine months ended September 29, 2019. These costs were incurred by the Enterprise Solutions segment. We expect to incur incremental costs of approximately $0.6 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 nine months ended September 27, 2020 and September 29, 2019:


	Severance		Other Restructuring and Integration Costs		Total Costs

Three Months Ended September 27, 2020	(In thousands)
Enterprise Solutions	$	327	$	1,010	$	1,337
Industrial Solutions	314		(294)		20
Total	$	641	$	716	$	1,357

Three Months Ended September 29, 2019
Enterprise Solutions	$	269	$	2,778	$	3,047
Industrial Solutions	—		—		—
Total	$	269	$	2,778	$	3,047

Nine Months Ended September 27, 2020
Enterprise Solutions	$	1,162	$	5,148	$	6,310
Industrial Solutions	1,132		2,006		3,138
Total	$	2,294	$	7,154	$	9,448

Nine Months Ended September 29, 2019
Enterprise Solutions	$	269	$	5,297	$	5,566
Industrial Solutions	—		—		—
Total	$	269	$	5,297	$	5,566

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				Nine Months Ended
	September 27, 2020		September 29, 2019		September 27, 2020		September 29, 2019

	(In Thousands)
Cost of sales	$	85	$	792	$	222	$	1,092
Selling, general and administrative expenses	1,272		2,255		9,226		4,474

Total	$	1,357	$	3,047	$	9,448	$	5,566

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

New charges	2,060
Cash payments	(3,968)
Foreign currency translation	(156)
Other adjustments	(1,541)
Balance at September 27, 2020	$	8,093

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.