Restructuring Charges and Asset Impairments

9 Months Ended

Jul. 26, 2015

Restructuring and Related Activities [Abstract]

Restructuring Charges and Asset Impairments

Restructuring Charges and Asset Impairments

From time to time, Applied initiates restructuring activities to appropriately align its cost structure and product investments based on changes in market condition and competitive environment as well as customer demand. Costs associated with restructuring actions can include termination benefits and related charges, in addition to facility closure, contract termination and other related activities. Restructuring charges and asset impairments are included in general and administrative expenses in the Consolidated Condensed Statements of Operations.

During the third quarter of fiscal 2015, Applied implemented cost reduction measures in its solar business to achieve a lower break-even level and improve business performance and incurred $17 million in restructuring charges and asset impairments and $34 million of inventory-related charges recorded in cost of products sold. These costs are reported in Applied Global Services and Energy and Environmental Solutions segments. Total costs expected to be incurred in implementing these actions are in the range of $45 million to $55 million. Applied expects to complete the principal activities related to these actions by the first quarter of fiscal 2016. As of July 26, 2015, the restructuring accruals related to these actions were $10 million, of which $8 million is related to severance and other employee cost accruals.