Restructuring Charges and Asset Impairments

From time to time, Applied initiates restructuring activities to appropriately align its cost structure relative to prevailing economic and industry conditions and associated customer demand as well as in connection with certain acquisitions. Costs associated with restructuring actions can include termination benefits and related charges in addition to facility closure, contract termination and other related activities.

The following table summarizes major components of the restructuring and asset impairment charges during fiscal 2014, 2013 and 2012:



	2014		2013			2012

	(In millions)
2012 Global Restructuring Plan
Severance and other employee-related costs	$	5	$	39		$	106
2012 EES Restructuring Plan
Severance and other employee-related costs	—		8			27
Contract cancellation and other costs	—		6			1
Asset impairments	—		12			20
Others
Severance and other employee-related costs	—		2			14
Contract cancellation and other costs	—		(4		)	—
	$	5	$	63		$	168

Restructuring and asset impairment charges were recorded as follows:



	2014		2013		2012

	(In millions)
Silicon Systems Group	$	—	$	1	$	4
Applied Global Services	—		2		15
Energy and Environmental Solutions	—		25		38
Corporate Unallocated	5		35		111
Total	$	5	$	63	$	168

2012 Global Restructuring Plan

On October 3, 2012, Applied announced a restructuring plan (the 2012 Global Restructuring Plan) to realign its global workforce and enhance its ability to invest for growth. Under this plan, Applied implemented a voluntary retirement program and other workforce reduction actions. The voluntary retirement program was available to certain U.S. employees who met minimum age and length of service requirements, as well as other business-specific criteria. Applied implemented other workforce reduction actions globally across multiple business segments and functions, the extent of which depended on the number of employees who participated in the voluntary retirement program and other considerations. A total of approximately 1,300 positions were affected under this plan. As of January 26, 2014, principal activities related to this plan were complete.

During fiscal 2014, 2013 and 2012, Applied recognized $5 million, $39 million and $106 million, respectively, of employee-related costs in connection with the 2012 Global Restructuring Plan. Total costs incurred in implementing this plan were $150 million, none of which were allocated to the operating segments.

2012 EES Restructuring Plan

On May 10, 2012, Applied announced a plan (the 2012 EES Restructuring Plan) to restructure its Energy and Environmental Solutions segment in light of challenging industry conditions affecting the solar photovoltaic and light-emitting diode (LED) equipment markets. As part of this plan, Applied relocated certain manufacturing, business operations and customer support functions of its precision wafering systems business and ceased LED development activities. The 2012 EES Restructuring Plan also impacted certain LED support activities in the Applied Global Services segment. The 2012 EES Restructuring Plan impacted approximately 300 positions globally. As of October 27, 2013, principal activities related to this plan were complete. Total costs incurred in implementing this plan were $87 million, of which $13 million were inventory-related charges.

During fiscal 2013 and 2012, Applied recognized $26 million and $48 million respectively, of restructuring and asset impairment charges in connection with the 2012 EES Restructuring Plan. These costs were reported in the Energy and Environmental Solutions and Applied Global Services segments. As of October 26, 2014, there were no remaining severance accruals associated with restructuring reserves under this program.

Integration of Varian and Prior Year Restructuring Plans

During fiscal 2013 and 2012, Applied also recognized $2 million and $14 million, respectively, of severance and other employee-related costs in connection with the integration of Varian. These costs were reported in the Silicon Systems Group and Applied Global Services segments. As of October 26, 2014, there were no remaining severance accrual associated with restructuring reserves under this program.

Changes in restructuring reserves for fiscal 2014, 2013, and 2012 were as follows:



	2012 Global Restructuring Plan			2012 EES Restructuring Plan						Others
	Severance and Other Employee-Related Costs			Severance and Other Employee-Related Costs			Contract Cancellation and Other Costs			Severance and Other Employee-Related Costs			Contract Cancellation and Other Costs			Total

	(In millions)
Balance, October 30, 2011	$	—		$	—		$	—		$	6		$	5		$	11
Provision for restructuring reserves	106			27			1			14			—			148
Consumption of reserves	—			(11		)	—			(15		)	—			(26		)
Balance, October 28, 2012	$	106		$	16		$	1		$	5		$	5		$	133
Provision for restructuring reserves	35			7			8			2			—			52
Consumption of reserves	(111		)	(18		)	(2		)	(5		)	—			(136		)
Adjustment of restructuring reserves	(4		)	—			(2		)	—			(4		)	(10		)
Balance, October 27, 2013	$	26		$	5		$	5		$	2		$	1		$	39
Provision for restructuring reserves	7			—			—			—			—			7
Consumption of reserves	(27		)	(5		)	(1		)	(2		)	—			(35		)
Adjustment of restructuring reserves	(2		)	—			—			—			—			(2		)
Balance, October 26, 2014	$	4		—			4			$	—		$	1		$	9