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Restructuring and Related Charges | 6 Months Ended
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Jun. 30, 2017
Restructuring and Related Activities [Abstract] |
Restructuring and Related Charges | RESTRUCTURING AND RELATED CHARGES The Company implemented several restructuring plans in the past few years. The goal of these plans was to bring operational expenses to appropriate levels relative to its net revenues, while simultaneously implementing extensive company-wide expense control programs. The Company accounts for its restructuring plans under the authoritative guidance for exit or disposal activities. The restructuring and related charges are included in “Product cost of revenue” and “Operating expenses-restructuring and related charges” in the Condensed Consolidated Statements of Operations. The following table summarizes the restructuring and related charges (in thousands):
| Three months ended |  | Six months ended
| June 30, 2017 |  | July 1, 2016 |  | June 30, 2017 |  | July 1, 2016
Restructuring and related charges in: |  |  |  |  |  |  |
Product cost of revenue | $ | 278 |  |  | $ | 6 |  |  | $ | 786 |  |  | $ | (23 | )
Operating expenses-Restructuring and related charges | 777 |  |  | 1,903 |  |  | 2,056 |  |  | 4,515 |
Total restructuring and related charges | $ | 1,055 |  |  | $ | 1,909 |  |  | $ | 2,842 |  |  | $ | 4,492 |
Harmonic 2016 Restructuring In the first quarter of 2016, the Company implemented a new restructuring plan (the “Harmonic 2016 Restructuring Plan”) to streamline the corporate organization, thereby reducing operating costs by consolidating duplicative resources in connection with the acquisition of TVN. The planned activities have primarily resulted, and will primarily result, in cash expenditures related to severance and related benefits and exiting certain operating facilities and disposing of excess assets. In the second quarter of 2016, the Company also initiated the TVN VDP in France to streamline the organization of the TVN French Subsidiary. In 2016, the Company recorded an aggregate of $20.0 million of restructuring and related charges under the Harmonic 2016 Restructuring Plan, of which $2.2 million was primarily related to the Company exiting from an excess facility at its U.S. headquarters and the remaining $17.8 million was related to severance and benefits for the termination of 118 employees worldwide, including 83 employees in France who participated in the TVN VDP. (See details of TVN VDP described below). Additionally, the restructuring and related charges under the Harmonic 2016 Restructuring Plan in 2016 were partially offset by approximately $2.0 million of gain from TVN pension curtailment. For the employees who participated in the TVN VDP, their pension benefit is funded by the TVN VDP and, as a result, the TVN defined benefit pension plan was remeasured at December 31, 2016, which resulted in a non-cash curtailment gain. This gain was recorded as an offset to restructuring and related costs in 2016. The Company also incurred $16.9 million of TVN acquisition- and integration-related expenses in 2016 and another $2.6 million in the six months ended June 30, 2017. The Company expects to continue to have some TVN integration-related costs throughout the remainder of 2017, primarily consisting of outside legal and advisory fees relating to the re-organization of TVN’s legal entities. (See Note 3, “Business Acquisition,” for additional information on TVN acquisition-and integration-related expenses). In the three months ended June 30, 2017, the Company recorded $1.1 million of restructuring and related charges under the Harmonic 2016 Restructuring Plan, consisting of $0.7 million of TVN VDP charges and $0.4 million of severance for other employees. In the six months ended June 30, 2017, the Company recorded $2.8 million of restructuring and related charges under the Harmonic 2016 Restructuring Plan, consisting of $1.8 million of TVN VDP charges and $1.0 million of severance for other employees. During the six months ended June 30, 2017, 21 non-VDP employees worldwide were terminated. TVN VDP During 2016, the Company consulted and worked with the works council for the TVN French Subsidiary and applicable union representatives to establish a voluntary departure plan to enable French employees of TVN to voluntarily terminate with certain benefits. A total of 83 employees applied for the TVN VDP and were duly approved by the Company in the fourth quarter of 2016. The total TVN VDP costs, including severance, certain benefits and taxes, as well as administration costs, is estimated at approximately $15.3 million, in aggregate, at the inception of the plan and will be paid over a period of four years, based on the TVN VDP terms agreed with each employee. The total final payout to the employees may be different from the initial estimates depending on the final social charges imputed on each employee’s total income and benefits received. The Company does not expect the final payout to be materially different from the initial estimates. The fair value of the total TVN VDP liability at inception was estimated to be approximately $14.8 million. The Company accounts for these special termination benefits in accordance with ASC 712, “Compensation - Nonretirement Postemployment Benefits,” which requires that the special termination benefits be recognized as a liability and a loss beginning when an employee accepts the offer of voluntary termination and the amount can be reasonably estimated. Where an employee is required to work beyond a minimum statutory notice period, the cost of the special termination benefit is recognized as an expense over the employee’s remaining service period. Where the employee is not required to work beyond a minimum statutory notice period, the cost of the special termination benefit is recognized upon the date the employee accepts the offer of voluntary termination, provided that the amount of the benefit can be estimated. Out of the 83 employees who applied for TVN VDP, 11 of them are required to work beyond the minimum statutory notice period into 2017. Based on the application of the accounting guidance, the Company recorded $1.8 million and $13.1 million of TVN VDP costs in the first six months of 2017 and in the year ended 2016, respectively. Cumulatively, the Company had paid an aggregate of $8.4 million of TVN VDP costs, of which $3.5 million was paid in 2016 and $4.9 million was paid in 2017. The fair value of the TVN VDP liability balance at June 30, 2017 was $7.2 million. The table below shows the estimated future payments for TVN VDP as of June 30, 2017 (in thousands):
Years ending December 31, |
2017 (remaining six months) | $ | 2,349 |
2018 | 3,302 |
2019 | 1,651 |
2020 | 783 |
Total | $ | 8,085 |
Excess Facility in San Jose, California In January 2016, the Company exited an excess facility at its U.S. headquarters in San Jose, California and recorded $1.4 million in facility exit costs. The fair value of these liabilities is based on a net present value model using a credit-adjusted risk-free rate. The liability will be paid out over the remainder of the leased properties’ terms, which continue through August 2020. As of the cease-use date, the fair value of this restructuring liability totaled $2.5 million. Offsetting these charges was an adjustment for deferred rent liability relating to this space of $1.1 million. In December 2016, as a result of a change in estimated sublease income, the restructuring liability was increased by $0.6 million. The following table summarizes the activity in the Company’s restructuring accrual related to the Harmonic 2016 Restructuring Plan during the six months ended June 30, 2017 (in thousands):
| Excess facilities |  | VDP (1) |  | Severance and benefits (2) |  | Total
Balance at December 31, 2016 | $ | 2,375 |  |  | $ | 9,650 |  |  | $ | 1,519 |  |  | $ | 13,544 |
Charges for 2016 Harmonic Restructuring Plan | 48 |  |  | 1,777 |  |  | 973 |  |  | 2,798 |
Adjustments to restructuring provisions |  |  |  |  | 44 |  |  | 44 |
Cash payments | (676 | ) |  | (4,862 | ) |  | (2,067 | ) |  | (7,605 | )
Foreign exchange gain |  |  | 597 |  |  | 31 |  |  | 628 |
Balance at June 30, 2017 | 1,747 |  |  | 7,162 |  |  | 500 |  |  | 9,409 |
Less: current portion (3) | (854 | ) |  | (3,915 | ) |  | (500 | ) |  | (5,269 | )
Long-term portion (3) | $ | 893 |  |  | $ | 3,247 |  |  | $ | — |  |  | $ | 4,140 |
(1) See discussion of the TVN VDP above for future estimated payments through 2020. (2) The Company anticipates that the remaining severance and benefits accrual at June 30, 2017 will be fully paid in 2017. (3) The current portion and long-term portion of the restructuring liability are reported under “Accrued and other current liabilities” and “Other non-current liabilities”, respectively, on the Company’s Condensed Consolidated Balance Sheets.

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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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