NOTE 14 – RESTRUCTURING

Restructuring charges in the first quarter of fiscal year 2016 primarily related to initiatives in the Paints segment to improve our North American cost structure through activities to rationalize our manufacturing operations and staffing reductions, which resulted from moving certain manufacturing to a third party. These restructuring activities, which began in fiscal year 2015 resulted in pre-tax charges of $869 in the three months ended January 29, 2016. Included in restructuring charges are non-cash asset-related charges of $571 for the three months ended January 29, 2016.

Restructuring charges in fiscal year 2015 included the following: (i) actions to close a manufacturing and other facilities in the Coatings segment to rationalize operations in the Australia region, (ii) actions to streamline and consolidate administrative operations in the Europe region and (iii) initiatives in the Paints segment to improve our North American cost structure through staffing reductions and actions to rationalize our manufacturing operations, which resulted from moving certain manufacturing to a third party. These restructuring activities resulted in pre-tax charges of $6,543 in the three months ended January 30, 2015. Included in restructuring charges are non-cash asset-related charges of $1,338 for the three months ended January 30, 2015. Restructuring charges were $21,569 for the full fiscal year 2015, including non-cash asset-related charges of $2,842. Asset-related charges include accelerated depreciation for assets with useful lives that have been shortened as well as asset impairment charges, accounted for in accordance ASC 360.

We expect approximately $6,000 of additional expenses in fiscal year 2016 for these restructuring plans that began in fiscal year 2015, primarily related to accelerated depreciation and lease exit costs. We currently estimate that upon completion of these restructuring plans in fiscal year 2016, these actions will reduce annual operating costs by approximately $5,000, which is primarily due to lower employee-related costs and lower depreciation expense. We expect a portion of these savings, net of execution costs, will be achieved over the next year and the full annual benefit of these actions is expected in fiscal year 2017.

The following restructuring charges by segment were recorded in the 2016 and 2015 periods:



Three Months Ended January 29, 2016	Liability Beginning Balance 10/30/2015		Expense		Payments and Other Activity			Liability Ending Balance 1/29/2016
Coatings
Severance and employee benefits	$	6,679	$	107	$	(3,098	)	$	3,688
Asset-related charges	—		—		—			—
Exit costs (consulting/site clean-up)	—		84		(84		)	—
Total Coatings	6,679		191		(3,182		)	3,688
Paints
Severance and employee benefits	6,004		54		(329		)	5,729
Asset-related charges	—		571		(571		)	—
Exit costs (consulting/site clean-up)	1,069		53		(154		)	968
Total Paints	7,073		678		(1,054		)	6,697
Other and Administrative
Severance and employee benefits	38		—		(1		)	37
Total Other and Administrative	38		—		(1		)	37
Total	$	13,790	$	869	$	(4,237	)	$	10,422



Three Months Ended January 30, 2015	Liability Beginning Balance 10/31/2014		Expense			Payments and Other Activity			Liability Ending Balance 1/30/2015
Coatings
Severance and employee benefits	$	8,711	$	3,355		$	(2,405	)	$	9,661
Asset-related charges	—		—			—			—
Exit costs (consulting/site clean-up)	4,437		(2		)	(4,327		)	108
Total Coatings	13,148		3,353			(6,732		)	9,769
Paints
Severance and employee benefits	803		1,472			13			2,288
Asset-related charges	—		1,338			(1,338		)	—
Exit costs (consulting/site clean-up)	1,901		380			(1,181		)	1,100
Total Paints	2,704		3,190			(2,506		)	3,388
Other and Administrative
Severance and employee benefits	152		—			(48		)	104
Total Other and Administrative	152		—			(48		)	104
Total	$	16,004	$	6,543		$	(9,286	)	$	13,261

The ending liability balance at January 29, 2016 and January 30, 2015 is included in other accrued liabilities and other long-term liabilities on our Condensed Consolidated Balance Sheets. The restructuring reserve balances presented are considered adequate to cover committed restructuring actions.

Restructuring charges were recorded in the Statement of Operations for the three months ended January 29, 2016 and January 30, 2015 approximately as follows:



	Three Months Ended
	January 29, 2016		January 30, 2015
Cost of sales	$	435	$	4,849
Research and Development	—		552
Selling, General and Administrative	434		1,142
Total Restructuring Charges	$	869	$	6,543