|Cohu announces their plan to cost savings in Multitests German facility.|
Charges of 6.8 to 7.8, million in Q 2 2019 with 2019 annual savings of 10.1 in 2019 and 11.3 in 2020.
Cohu Inc. (COHU) filed a Form 8K - Costs of Exits Or Disposals - with the U.S Securities and Exchange Commission on April 30, 2019.
Cohu, Inc. ("Cohu," "we" or "our") has implemented a restructuring plan, and entered into a social plan ("Plan") with the Works Council representing certain of the employees of our wholly owned subsidiary, Multitest elektronische Systeme GmbH, as part of our integration plan associated with our October 2018 acquisition of Xcerra Corporation. The Plan will reduce headcount, enable us to consolidate the facilities of our multiple operations located near Rosenheim, Germany, as well as transition certain manufacturing to other lower cost regions. As of April 30, 2019, we have completed the notifications to approximately 105 impacted employees in Germany. The Plan is being implemented as part of a comprehensive review of our operations and is intended to streamline and reduce our operating cost structure and capitalize on previously communicated acquisition synergies yielding $20 million annual run-rate cost reductions in the first two years and a $40 million annual run rate in the mid-term, defined as three to five-years post-acquisition.
We expect the reduction in force charges, consisting primarily of severance and other termination benefits, to be in the range of $7.8 million to $8.8 million. These estimated costs associated with the Plan will be paid predominantly in cash. We anticipate that these charges will be primarily recognized in second quarter fiscal 2019. We estimate the Plan will reduce gross pre-tax cost by approximately $6.4 million on an annual run-rate basis at the end of fiscal 2019, growing to approximately $7.5 million on an annual run-rate basis starting in the third quarter fiscal 2020 as Plan benefits are fully realized.
When combined with the cost savings from various employee resignations after the October 2018 acquisition but prior to the Plan, the total cost savings at the end of fiscal 2019 is $10.1 million on an annual run-rate basis, growing to $ 11.3 million on an annual run-rate basis by the third quarter of fiscal 2020.