Item2.05Costs Associated with Exit or Disposal Activities
On June23,2020, Ichor Holdings,Ltd. (the “Company”) announced the closure of its manufacturing facility in UnionCity, California. The closure is the result of a restructuring of our plastics business in order to streamline operations and improve asset utilization. The Company notified employees at the facility of the closure on June23,2020. Approximately 80employees located at the facility will be impacted by the closure.
The Company expects to substantially complete the closure of the facility by the end of its 2020 fiscal year, ending December25,2020. As a result of the closure, the following costs will result in cash expenditures: (1)approximately $0.9million in employee-related restructuring costs, primarily consisting of severance payments, and (2)other costs not expected to be significant, including, but not limited to, costs to exit the leased facility, which expires in April2021, and costs to cancel existing orders with suppliers. In addition, the Company expects to incur the following non-cash asset-related charges: (1)a write-down of inventories of approximately $3.0million to $5.0million, and (2)increased depreciation expense of approximately $1.5million over the next two quarters associated with revising the estimated service life of the facility’s tangible fixed assets as a result of the closure.