Restructuring and Asset Impairments

6 Months Ended

May 01, 2011

Restructuring and Asset Impairments [Abstract]


Note 10	Restructuring and Asset Impairments

On July 21, 2010, Applied announced a plan to restructure its Energy and Environmental Solutions segment, which was expected to impact between 400 to 500 positions globally. During the third quarter of fiscal 2010, Applied incurred employee severance charges of $45 million associated with this program. During the first quarter of fiscal 2011, as a result of changes in Applied’s operating environment and business requirements, Applied revised its workforce reduction under this program to approximately 200 positions and recorded a favorable adjustment of $28 million. The improved economic environment continued in the second quarter of fiscal 2011, and as a result Applied recorded an additional favorable adjustment of $8 million. As of May 1, 2011, the remaining severance accrual associated with restructuring reserves under this program was $2 million.

On November 11, 2009, Applied announced a restructuring program to reduce its global workforce as of October 25, 2009 by approximately 1,300 to 1,500 positions, or 10 to 12 percent, over a period of 18 months. During the first quarter of fiscal 2010, Applied recorded restructuring charges of $104 million associated with this program. During the third quarter of fiscal 2010, as a result of changes in business requirements, Applied revised its global workforce reduction under this program to approximately 1,000 positions and recorded a favorable adjustment of $20 million. The improved economic environment continued in the second quarter of fiscal 2011, and as a result Applied recorded an additional favorable adjustment of $19 million. As of May 1, 2011, the remaining severance accrual associated with restructuring reserves under this program was $16 million.

During the first and second quarters of fiscal 2011, Applied favorably adjusted the severance accrual associated with a global restructuring program announced in the first quarter of fiscal 2009 by $4 million and $1 million, respectively. As of May 1, 2011, no severance accrual remained under this program.

Changes in severance accruals associated with restructuring reserves for the six months ended May 1, 2011 were as follows:


	Severance
	(In millions)

Balance, October 31, 2010	$	99
Consumption of reserves		(14	)
Adjustment of restructuring reserves		(32	)

Balance, January 30, 2011		53
Consumption of reserves		(7	)
Adjustment of restructuring reserves		(28	)

Balance, May 1, 2011	$	18

In addition, as of May 1, 2011, Applied had $5 million in restructuring reserves associated with facilities.

During the second quarter of fiscal 2011, Applied incurred impairment charges of $24 million associated with certain intangible assets and purchased technology. See Note 8 of the Notes to Consolidated Condensed Financial Statement.

During the second quarter of fiscal 2010, Applied recorded an asset impairment charge of $9 million to write down a facility to its estimated fair value based on prices for comparable local properties. The facility was reclassified as an asset held for sale. In the first quarter of fiscal 2011, Applied recorded additional impairment charges of $3 million related to this facility.