Restructuring and Integration Costs

2014 Sauflon Integration Plan

During the fiscal fourth quarter of 2014, in connection with the Sauflon acquisition, our CooperVision business unit initiated restructuring and integration activities to optimize operational synergies of the combined companies. These activities include product and equipment rationalization, workforce reductions and consolidation of duplicative facilities. As of October 31, 2016, our activities related to this restructuring and integration plan were complete. The total restructuring costs under this plan were $148.3 million.

In fiscal 2016, we recorded in cost of sales $56.4 million of expense, arising from production-related asset disposals, accelerated depreciation on equipment, and inventory rationalization, primarily related to older lens products, based on our review of products, materials and manufacturing processes of Sauflon. We recorded in cost of sales $1.1 million of employee termination costs. We recorded in selling, general and administrative expense a reduction of $1.1 million due to decreased expected employee termination payments; and we recorded $0.2 million of expense for lease termination costs. In addition, CooperVision incurred $10.0 million of integration costs in fiscal 2016, included in operating expenses.

In fiscal 2015, we recorded in cost of sales $57.7 million of expense, arising from production-related asset disposals and accelerated depreciation on equipment, primarily related to our hydrogel lenses, based on our review of products, materials and manufacturing processes of Sauflon. We recorded in cost of sales $4.0 million of employee termination costs. We recorded in selling, general and administrative expense a reduction of $7.2 million, as a result of decreased estimates in expected employee termination costs and voluntary terminations; and we recorded $0.4 million of expense for lease termination costs. We recorded in research and development expense $0.7 million of employee termination costs. In addition, CooperVision incurred $35.2 million of integration costs in fiscal 2015, included in operating expenses.

In fiscal 2014, we recorded restructuring charges of $20.3 million for employee termination costs; $15.3 million for product rationalization, including inventory write-offs and production-related asset impairments, primarily related to our Avaira toric contact lenses, based on our review of products, materials and manufacturing processes of Sauflon; and $0.5 million of lease termination costs for facility closures. In addition, CooperVision incurred $2.8 million of integration costs recorded in selling, general and administrative expense. Of the employee termination costs, $19.7 million are recorded in selling, general and administrative expense and $0.6 million in research and development expense. The product rationalization costs are recorded in cost of sales. The lease termination costs and other related costs are recorded in selling, general and administrative expense.

A summary of the total restructuring costs by major component recognized for the fiscal years ended October 31, 2016, October 31, 2015, and October 31, 2014, is as follows:



(In millions)	Employee-related			Facilities-related		Product Rationalization		Total
Amounts incurred in:
Year ended October 31, 2014	$	20.3		$	0.5	$	15.3	$	36.1
Year ended October 31, 2015	(2.5		)	0.4		57.7		55.6
Year ended October 31, 2016	—			0.2		56.4		56.6
Cumulative amounts as of October 31, 2016	$	17.8		$	1.1	$	129.4	$	148.3

The following table summarizes the restructuring activities by major component:



(In millions)	Employee-related			Facilities-related			Product Rationalization			Total
Additions during fiscal 2014	$	20.3		$	0.5		$	15.3		$	36.1
Payments during the fiscal year	(0.4		)	—			—			(0.4		)
Non-cash adjustments (b)	—			—			(15.3		)	(15.3		)
Balance at October 31, 2014	$	19.9		$	0.5		$	—		$	20.4
(Reductions) additions during fiscal 2015	(2.5		)	0.4			57.7			55.6
Payments during the fiscal year	(9.0		)	(0.4		)	—			(9.4		)
Non-cash adjustments (a) (b)	0.2			(0.2		)	(57.7		)	(57.7		)
Balance at October 31, 2015	$	8.6		$	0.3		$	—		$	8.9
Additions during fiscal 2016	—			0.2			56.4			56.6
Payments during the fiscal year	(5.2		)	(0.2		)	—			(5.4		)
Non-cash adjustments (a) (b)	(0.6		)	—			(56.4		)	(57.0		)
Balance at October 31, 2016	$	2.8		$	0.3		$	—		$	3.1

(a) Non-cash adjustments for employee-related and facilities-related costs represent currency translation adjustment.

(b) Non-cash adjustments for product rationalization represent equipment disposals, inventory write-offs and accelerated depreciation.