KLA Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Restructuring Charges

Restructuring Charges

6 Months Ended

Dec. 31, 2015

Restructuring and Related Activities [Abstract]

NOTE 13 — RESTRUCTURING CHARGES

The Company has in recent years undertaken a number of cost reduction activities, including workforce reductions, in an effort to lower its ongoing expense run rate. The program in the United States is accounted for in accordance with the authoritative guidance related to compensation for non-retirement post-employment benefits, whereas the programs in the Company’s international locations are accounted for in accordance with the authoritative guidance for contingencies.

During the fourth quarter of fiscal year 2015, the Company implemented a plan to reduce its global employee workforce to streamline the organization and business processes in response to changing customer requirements in the industry. The goals of this reduction were to enable continued innovation, direct the Company’s resources toward its best opportunities and lower its ongoing expense run rate. The Company substantially completed its global workforce reduction during the six months ended December 31, 2015 and recorded a $1.4 million net restructuring charge for the three months ended December 31, 2015, of which $0.5 million was recorded to costs of revenues, $0.5 million to engineering, research and development expense and $0.4 million to selling, general and administrative expense. The Company recorded $8.5 million net restructuring charge for the six months ended December 31, 2015, of which $3.3 million was recorded to costs of revenues, $1.5 million to engineering, research and development expense and $3.7 million to selling, general and administrative expense.

The following table shows the activity primarily related to the accrual for severance and benefits for the three and six months ended December 31, 2015 and 2014:



	Three months ended December 31,						Six months ended December 31,
(In thousands)	2015			2014			2015			2014
Beginning balance	$	13,061		$	4,955		$	24,887		$	2,329
Restructuring costs	1,392			3,399			8,458			7,280
Adjustments	(563		)	(90		)	(190		)	54
Cash payments	(10,881		)	(2,934		)	(30,146		)	(4,333		)
Ending balance	$	3,009		$	5,330		$	3,009		$	5,330

The remaining accrual for severance and benefits as of December 31, 2015 is expected to be paid out by the end of the Company’s fiscal year ending June 30, 2016.