Quarterly report pursuant to Section 13 or 15(d)

Restructuring and Other Special Charges

v3.5.0.2
Restructuring and Other Special Charges
 6 Months Ended
Jun. 25, 2016
Restructuring and Related Activities [Abstract]  
Restructuring and Other Special Charges, Net
Restructuring and Other Special Charges, Net
2015 Restructuring Plan
In the third quarter of 2015, the Company implemented a restructuring plan (2015 Restructuring Plan) focused on its ongoing efforts to simplify its business and better align resources around its priorities and business outlook. The 2015 Restructuring Plan largely involved a reduction of global headcount by approximately 5% and includes organizational actions such as outsourcing certain IT services and application development. The actions associated with the 2015 Restructuring Plan are expected to be substantially completed by the end of the third quarter of 2016.
The following table provides a summary of the restructuring activities in the first six months of 2016 and the related liabilities recorded in Other current liabilities and Other long-term liabilities on the Company’s condensed consolidated balance sheets as of June 25, 2016:
 
Severance
and related
benefits
 
Other exit
related
costs
 
Total
 
(In millions)
Balance as of December 26, 2015
$
14

 
$
—

 
$
14

Charges (reversals), net
(2
)
 
—

 
(2
)
Cash payments
(7
)
 
—

 
(7
)
Balance as of June 25, 2016
$
5

 
$
—

 
$
5


2014 Restructuring Plan
In the fourth quarter of 2014, the Company implemented a restructuring plan (2014 Restructuring Plan) designed to improve operating efficiencies. The 2014 Restructuring Plan involved a reduction of global headcount by approximately 6% and an alignment of its real estate footprint with its reduced headcount. In the first six months of 2015, the Company recorded an $11 million restructuring charge, which consisted of $4 million for severance and benefit costs and $7 million for facilities related costs. The 2014 Restructuring Plan was largely completed by the end of the third quarter of 2015. During the first six months of 2016, the Company recorded a restructuring charge reversal of $7 million, of which $5 million related to facilities costs associated with a lease amendment which reduced a lease liability previously accrued under this plan.
The following table provides a summary of the restructuring activities in the first six months of 2016 and the related liabilities recorded in Other current liabilities and Other long-term liabilities on the Company’s condensed consolidated balance sheets as of June 25, 2016:
 
Severance
and related
benefits
 
Other exit
related
costs
 
Total
 
(In millions)
Balance as of December 26, 2015
$
5

 
$
15

 
$
20

Charges (reversals), net
(1
)
 
(7
)
 
(8
)
Cash payments
(1
)
 
(2
)
 
(3
)
Balance as of June 25, 2016
$
3

 
$
6

 
$
9


Dense Server Systems Business Exit
As a part of the Company’s strategy to simplify and sharpen its investment focus, the Company exited the dense server systems business, formerly SeaMicro, in the first quarter of 2015. As a result, the Company recorded a charge of $76 million in Restructuring and other special charges, net on the Company’s condensed consolidated statements of operations in the first six months of 2015. This charge included an impairment charge of $62 million related to the acquired intangible assets. The Company concluded that the carrying value of the acquired intangible assets associated with its dense server systems business was fully impaired as the Company did not have plans to utilize the related freedom fabric technology in any of its future products nor did it have any plans at that time to monetize the associated intellectual property. In addition, the exit charge consisted of a $7 million non-cash charge related to asset impairments, $4 million of severance and related benefits and $3 million for contract or program termination costs. The Company has substantially completed this exit activity during the first quarter of 2016.