RESTRUCTURING AND CANCELLATION OF PROJECT

12 Months Ended

Sep. 28, 2024

Restructuring and Related Activities [Abstract]

RESTRUCTURING AND CANCELLATION OF PROJECT

17. RESTRUCTURING AND CANCELLATION OF PROJECT

Cancellation of Project

The Company was engaged by one of its customers (the "Customer") to support the Customer with the development and future mass production of certain technologies relating to advanced display (the "Project"), which project was previously referred to as Project W. In connection with the Customer's strategic review of its business, the Customer informed the Company that it cancelled the Project.

In connection with the foregoing, on March 11, 2024, the Company committed to a plan to cease operational activities and commence wind down activities concerning various aspects of Project W. As at September 28, 2024, the wind down activities have been substantially completed.

Wind down charges as a result of these activities incurred during fiscal 2024 were accounted in accordance with ASC 330, Inventory. The Company also performed the impairment tests of all associated assets with reference to the guidance under ASC 330, Inventory and ASC 360, Property, Plant and Equipment. The wind down charges and impairments are primarily recorded in the Advanced Solutions reportable segment. Based on current information available, we do not expect any material future charges with respect to the cancellation of Project W that will be classified as exit and disposal costs under the guidance of ASC 420, Exit or Disposal Cost Obligations. We plan to fund the cash costs through existing cash balances.

On November 4, 2024, the Company and the Customer entered into a written agreement pursuant to which the Customer has agreed to reimburse the Company for certain costs and expenses that the Company incurred in connection with the Project. The aggregate amount of the reimbursement that the Customer has agreed to pay to the Company pursuant to the agreement is $86.2 million.

The following table presents a summary of the charges related to the cancellation of Project W incurred for the year ended September 28, 2024.


(in thousands)		Total Recognized as of
Charges	Statement of Operations Classification	September 28, 2024
Inventory write-down	Cost of sales	$	57,333
Purchase Order cancellation charges	Cost of sales	$	2,931
Impairment charges relating to long-lived assets	Impairment charges	$	44,472
		$	104,736

Inventory write-down

In determining the value of our inventory, we consider indicators that net realizable value may be lower than cost based upon projections about future consumption, and market conditions. We recorded a write-down to inventory totaling $57.3 million with a corresponding increase to cost of sales in our Consolidated Statements of Operations for fiscal 2024.

Purchase Order cancellation charges

$2.9 million of purchase order cancellation charges were included in the cost of sales in our Consolidated Statements of Operations for fiscal 2024. These costs relate to a net loss on firm purchase commitments for goods for inventory in accordance with ASC 330.

Impairment charges relating to long-lived assets

In determining the fair value of the long-lived assets, the estimated future cash flows were projected as zero. Accordingly, as of September 28, 2024, we recorded a full impairment of the long-lived assets, resulting in an impairment charge of $38.0 million related to property, plant and equipment primarily pertaining to leasehold improvements, $3.0 million related to the ROU assets and $3.5 million related to Asset Retirement Obligation (ARO).

Restructuring

In March 2024, the Company implemented a restructuring program to reallocate resources within the Company to enhance its performance, boost productivity and drive efficiency initiatives. As a result, we accounted for the related employee termination costs in accordance with ASC 712, Compensation—Nonretirement Postemployment Benefits. For fiscal 2024, employee termination costs of $2.9 million related to other severance and employee costs incurred as a result of the restructuring program, primarily pertaining to ongoing employee benefit arrangements, were recorded within "Selling, general and administrative" in the Consolidated Statements of Operations.

In September 2024, the Company also implemented a restructuring program as part of our efforts to centralize global manufacturing and supply chain operations. The accrued costs amounting to $2.2 million, which pertain to ongoing employee benefit arrangements arising from the restructuring program as of September 28, 2024 are accounted in accordance with ASC 712 and is expected to be paid by the end of fiscal year 2025. The costs were recorded within "Selling, general and administrative" in the Consolidated Statement of Operations. The Company also expects to record costs amounting to $1.8 million in fiscal year 2025, pertaining to one-time benefit arrangements in accordance with ASC 420.