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Restructuring Costs
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Sep. 27, 2014
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| Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring Costs |
Restructuring Costs
Fiscal 2014
On June 25, 2014, the Company committed to a plan to permanently close its distribution facility located in Carson, California (the “Carson Distribution Facility”) on July 25, 2014. The Company consolidated the Carson Distribution Facility’s distribution and warehousing operations into the Company’s existing distribution facilities located in LaSalle, Illinois and Chesapeake, Virginia. This consolidation was part of the Company’s continued efforts for simplification and improved efficiencies. The closure of the Carson Distribution Facility resulted in a head count reduction of approximately 77 employees.
The following table summarizes the charges related to the restructure recognized during the thirteen and thirty-nine weeks ended September 27, 2014 (in thousands):
The severance costs were included in fulfillment expense in the second quarter of fiscal 2014. As of September 27, 2014, $260 of severance liability was included in accrued expenses. The Company expects to pay the remaining severance during the fourth quarter of 2014. All relocation and inventory transfer costs were expensed and paid during the thirteen weeks ended September 27, 2014.
Substantially all of the unsold inventory in the Carson warehouse on the date of closure was moved to the remaining two warehouses. A charge for $130 was taken for inventory that was not deemed economical to transfer. Additionally, due to expected future capacity constraints, the Company reduced the sales price of certain inventory resulting in a charge of $348. The aggregate charge of $478 was recorded to cost of sales during the second quarter of 2014.
The timing and costs of the consolidation plan may vary from the Company’s current estimates based on many factors. The Company anticipates additional reductions in sales price of certain inventory in the fourth of 2014, however, the Company cannot reasonably estimate whether the reduction of such sales prices will result in additional inventory write downs. The Company may incur other charges not currently anticipated due to events that may occur as a result of, or associated with, the consolidation plan and related activities. All restructuring costs incurred in connection with the closure of the Carson Distribution Facility are included in the Base USAP reportable segment.
Fiscal 2013
As part of the Company’s initiatives to reduce labor costs and improve operating efficiencies in response to the challenges in the marketplace and general market conditions, we reduced our workforce in the first quarter and second quarter of 2013. We laid off 13 employees in the United States and 163 employees in the Philippines reducing our workforce by a total of 176 employees in the first quarter of 2013 and 15 employees in the second quarter of 2013. For the thirty-nine weeks ended September 28, 2013, severance charges of approximately $723 were recorded in marketing expense, general and administrative expense, fulfillment expense and technology expense for $394, $109, $58 and $162, respectively.
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