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 $104.0 million. The $42.0 million increase over the prior estimate relates to additional manufacturing restructuring activities, primarily related to our hydrogel contact lenses, based on our review of products, materials and manufacturing processes of Sauflon. We expect to complete the activities related to operating expenses in our fiscal first quarter of 2016, and to incur costs related to the manufacturing activities through the end of fiscal 2016.

These costs include approximately $80.0 million associated with assets, including product rationalization and related equipment disposals and accelerated depreciation, about $18.0 million associated with employee termination costs and about $6.0 million associated with facility lease termination costs.

In the three and nine months ended July 31, 2015, we recorded in cost of sales $12.4 million and $26.2 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 three months ended July 31, 2015, we recorded in cost of sales $0.3 million of employee termination costs. In the three and nine months ended July 31, 2015, we reduced in selling, general and administrative expense, the accrued employee termination costs by $2.3 million and $6.7 million, respectively, based on current estimates of the expected costs and the results of voluntary terminations; and we recorded $0.3 million of expense for lease termination costs. In the three and nine months ended July 31, 2015, we recorded in research and development expense $0.2 million and $0.5 million of employee termination costs, respectively. In addition, CooperVision incurred $10.7 million and $24.7 million of integration costs in the three and nine months ended July 31, 2015, respectively, 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 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. The product rationalization costs were recorded in cost of sales. 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 lease termination costs and other related costs were recorded in selling, general and administrative expense. In addition, CooperVision incurred $2.8 million of integration costs included in operating expenses.

A summary of the total restructuring costs by major component recognized for the fiscal year ended October 31, 2014, and nine months ended July 31, 2015, 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
Nine months ended July 31, 2015	(5.9		)	0.3		26.2		20.6
Cumulative amounts incurred as of July 31, 2015	$	14.4		$	0.8	$	41.5	$	56.7

The following table summarizes the restructuring activities by major component for the fiscal year ended October 31, 2014 and the nine months ended July 31, 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 nine months ended July 31, 2015	(5.9		)	0.3			26.2			20.6
Payments during the nine months ended July 31, 2015	(5.3		)	(0.1		)	—			(5.4		)
Non-cash adjustments (a) (b)	0.2			(0.1		)	(26.2		)	(26.1		)
Balance as of July 31, 2015	$	8.9		$	0.6		$	—		$	9.5

(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.