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 workforce reductions, consolidation of duplicative facilities and product rationalization. We estimate that the total restructuring costs under this plan will be $62.0 million. These costs include about $40.0 million associated with assets, including product rationalization and related equipment disposals and accelerated depreciation, and about $22.0 million associated with employee termination costs and facility lease termination costs. We expect these activities to be completed by our fiscal first quarter of 2016.

In the three and six month periods ended April 30, 2015, we recorded in cost of sales $5.2 million and $13.9 million of expense, respectively, 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. In the current three month period, we reduced the accrued employee termination costs in selling, general and administrative expense by $4.5 million based on current estimates of the expected costs and the results of voluntary terminations. We recorded in research and development expense $0.2 million and $0.3 million of employee termination costs in the three and six months ended April 30, 2015, respectively. In addition, Coopervision incurred $8.0 million and $14.1 million of integration costs in the three and six months ended April 30, 2015, respectively, recorded in selling, general and administrative expense.

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 disposals, 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 were recorded in selling, general and administrative expense and $0.6 million in research and development expense. The product rationalization costs were recorded in cost of sales. The lease termination costs and other related costs were recorded in selling, general and administrative expense.

The following table summarizes the restructuring activities by major component for the fiscal year ended October 31, 2014 and the six months ended April 30, 2015:



(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
Additions (reductions) during the six months ended April 30, 2015	(4.2		)	—		13.9			9.7
Payments during the six months ended April 30, 2015	(2.5		)	—		—			(2.5		)
Non-cash adjustments (a) (b)	(0.7		)	—		(13.9		)	(14.6		)
Balance as of April 30, 2015	$	12.5		$	0.5	$	—		$	13.0

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

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