17.Restructuring
As previously disclosed, in the second quarter of fiscal 2020, in connection with its cost-savings initiative, the Company committed to a plan of reduction in force which has resulted and will result in the elimination of certain positions and termination of employment for certain employees worldwide. The Company had previously estimated this plan would cost $14,000. This estimate has been revised to $22,500 driven primarily by the strategic cost reductions to the Company’s global Studio + Digital operations to adjust to anticipated consumer demand. During the second and third quarters of fiscal 2020, the Company reduced its total headcount by approximately 35% since the end of fiscal 2019. As of September 26, 2020, the Company had approximately 11 employees, a majority of whom were part-time employees. The Company recorded expenses in connection with employee termination benefit costs of $2,251 ($1,680 after tax) and $13,459 ($9,996 after tax) during the three and nine months ended September 26, 2020, respectively. These expenses impacted cost of revenues by $1,062 and $7,565 and selling, general and administrative expenses by $1,189 and $5,894 in the three and nine months ended September 26, 2020, respectively. All expenses were recorded to general corporate expenses and, therefore, there was no impact to the segments. For the three and nine months ended September 26, 2020, the Company made payments of $4,419 and $8,086, respectively, towards the liability for these expenses and increased provision estimates by $20 for each respective period. The Company expects the remaining liability of $5,393 to be paid in full no later than the end of fiscal 2021. The Company anticipates recording additional expenses in connection with this restructuring of approximately $9,000.
As previously disclosed, in the first quarter of fiscal 2019, the Company undertook an organizational realignment which resulted in the elimination of certain positions and termination of employment for certain employees worldwide. The Company recorded expenses in connection with employee termination benefit costs of $6,331 ($4,727 after tax) during the nine months ended September 28, 2019 (all expenses were recorded in the first quarter of fiscal 2019). These expenses impacted cost of revenues by $1,425 and selling, general and administrative expenses by $4,906 in the nine months ended September 28, 2019. The Company did not record additional expenses in connection with this organizational realignment. All expenses were recorded to general corporate expenses and, therefore, there was no impact to the segments. For the fiscal year ended December 28, 2019, the Company made payments of $5,077 towards the liability for these expenses and lowered provision estimates by $83. For the nine months ended September 26, 2020, the Company made payments of $1,052 towards the liability for these expenses and lowered provision estimates by $119. As of September 26, 2020, there was no outstanding liability related thereto.
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