Restructuring Charges

12 Months Ended

Dec. 25, 2021

Restructuring and Related Activities [Abstract]

On September 25, 2021, we adopted restructuring plans to improve our business effectiveness and streamline our operations by consolidating certain manufacturing facilities for both the Probe Cards segment and the Systems segment. This includes plans to consolidate or relocate certain leased locations in the United States to other locations in the United States, Germany and Asia. As a result of these changes to certain work locations, we have incurred, and expect to incur, personnel related costs to sever, relocate, or retain select employees. Additionally, as part of these plans we are undertaking actions to adjust capacity for certain product offerings. Contract termination costs include charges to satisfy contract obligations. The amounts accrued are based on our best estimates, however it is reasonably possible that the final amount paid or incurred will differ from the amount estimated in the near term. We expect the actions defined under these plans will be largely completed by the end of December 2022, except facilities charges which may extend beyond that time.

This plan is expected to result in FormFactor recording restructuring and other charges in the aggregate amount of approximately $6.0 million to $9.0 million, estimated to be comprised primarily of $1.0 million to $2.0 million of severance and employee-related costs, $2.0 million to 3.0 million in contract and lease termination costs, $1.0 million to $1.5 million in inventory impairments, and $2.0 million to $2.5 million of cost related to impairment of leasehold improvements, facility exits, and other costs. Approximately $3.0 million to $4.5 million and $3.0 million to $4.5 million is expected within the Probe Cards segment and Systems segment, respectively.

Restructuring charges by reportable segment included in our Consolidated Statements of Income were as follows (in thousands):


	Fiscal Year Ended
	December 25, 2021
	Probe Cards		Systems		Total
Cost of revenues	$	2,720	$	485	$	3,205
Research and development	—		869		869
Selling, general and administrative	—		50		50
	$	2,720	$	1,404	$	4,124

Changes to the restructuring accrual during December 25, 2021 were as follows (in thousands):


	Employee Severance and Benefits		Inventory Impairments		Property and Equipment Impairments		Contract Termination Costs		Total
December 26, 2020	$	—	$	—	$	—	$	—	$	—
Restructuring charges	1,175		1,376		270		2,800		5,621

Adjustment to restructuring charges	(147)		—		—		(1,350)		(1,497)
Non-cash settlement	—		(1,376)		(270)		—		(1,646)
December 25, 2021	$	1,028	$	—	$	—	$	1,450	$	2,478