
Note 14.	Restructuring and Other Costs, Net

Restructuring and other costs in the first nine months of 2016 included continuing charges for headcount reductions and facility consolidations in an effort to streamline operations, including the closure and consolidation of operations within several facilities in the U.S., Europe and Asia; third-party acquisition transaction and integration costs primarily associated with the acquisitions of FEI and Affymetrix; sales of inventories revalued at the date of acquisition; costs to conform the accounting policies of FEI and Affymetrix with the company's accounting policies; costs to achieve synergies related to acquisitions, including severance and abandoned facility costs; and net charges for litigation matters. These charges were partially offset by gains on sales of real estate. In the first nine months of 2016, severance actions associated with facility consolidations and cost reduction measures affected approximately 2% of the company’s workforce.

As of November 4, 2016, the company has identified restructuring actions that will result in additional charges of approximately $70 million, primarily in 2016 and 2017, which will be recorded when specified criteria are met, such as communication of benefit arrangements and abandonment of leased facilities.

Third Quarter of 2016

During the third quarter of 2016, the company recorded net restructuring and other costs by segment as follows:



(In millions)	Cost of Revenues		Selling, General and Administrative Expenses		Restructuring and Other Costs, Net		Total

Life Sciences Solutions	$	10.8	$	6.2	$	10.2	$	27.2
Analytical Instruments	21.6		39.1		30.9		91.6
Specialty Diagnostics	—		—		11.7		11.7
Laboratory Products and Services	—		—		1.5		1.5
Corporate	—		17.2		0.6		17.8

	$	32.4	$	62.5	$	54.9	$	149.8

The components of net restructuring and other costs by segment are as follows:

Life Sciences Solutions

In the third quarter of 2016, the Life Sciences Solutions segment recorded $27.2 million of net restructuring and other charges, including charges to cost of revenues of $10.8 million for sales of inventories revalued at the date of acquisition. The segment also recorded $6.2 million of charges to selling, general and administrative expenses principally for third-party transaction and integration costs related to the acquisition of Affymetrix. In addition, the segment recorded $10.2 million of restructuring and other costs, net, most of which were cash costs associated with headcount reductions and actions to achieve related synergies in the U.S.

Analytical Instruments

In the third quarter of 2016, the Analytical Instruments segment recorded $91.6 million of net restructuring and other charges. The segment recorded charges to cost of revenues of $21.6 million, including $16.1 million to conform the accounting policies of FEI with the company's accounting policies and $5.5 million for the sales of inventory revalued at the date of acquisition. The segment recorded $39.1 million of charges to selling, general, and administrative expense, including $30.5 million for third-party transaction costs related to the acquisition of FEI (Note 2), as well as $8.5 million to conform the accounting policies of FEI with the company's accounting policies. The segment also recorded $30.9 million of cash restructuring costs, primarily for severance obligations payable to former FEI executives.

Specialty Diagnostics

In the third quarter of 2016, the Specialty Diagnostics segment recorded $11.7 million of net restructuring and other costs, including $10.0 million of charges for litigation-related matters, with the remainder principally for severance associated with headcount reductions in Europe.

Laboratory Products and Services

In the third quarter of 2016, the Laboratory Products and Services segment recorded $1.5 million of net restructuring and other charges, including $2.2 million of cash restructuring costs primarily for employee severance and other costs associated facility consolidations in the U.S. These cash costs were partially offset by $0.7 million of net gains associated with litigation-related matters of a divested business.

Corporate

In the third quarter of 2016, the company recorded $17.8 million of restructuring and other costs, principally within selling, general, and administrative expense, including $17.2 million of charges for product liability litigation. The company also recorded $0.6 million of cash restructuring costs associated with facility consolidation at its corporate operations.

First Nine Months of 2016

During the first nine months of 2016, the company recorded net restructuring and other costs by segment as follows:



(In millions)	Cost of Revenues		Selling, General and Administrative Expenses		Restructuring and Other Costs, Net		Total

Life Sciences Solutions	$	30.9	$	32.6	$	57.4	$	120.9
Analytical Instruments	21.6		40.9		55.4		117.9
Specialty Diagnostics	—		—		11.6		11.6
Laboratory Products and Services	7.9		0.5		15.4		23.8
Corporate	—		21.2		1.1		22.3

	$	60.4	$	95.2	$	140.9	$	296.5

The components of net restructuring and other costs by segment are as follows:

Life Sciences Solutions

In the first nine months of 2016, the Life Sciences Solutions segment recorded $120.9 million of net restructuring and other charges. The segment recorded charges to cost of revenues of $30.9 million, including $27.0 million for sales of inventories revalued at the date of acquisition and $3.9 million to conform the accounting policies of Affymetrix with the company's accounting policies. The segment also recorded $32.6 million of charges to selling, general and administrative expenses, including $30.9 million of third-party transaction and integration costs related to the acquisition of Affymetrix and $3.6 million for accelerated depreciation at facilities closing due to real estate consolidation, which were offset in part by credits of $1.9 million from contingent acquisition consideration. In addition, the segment recorded $62.3 million of cash restructuring costs, including $44.6 million of severance and related costs primarily to achieve acquisition synergies, and $17.7 million of abandoned facilities costs principally for the consolidation of facilities in the U.S. These costs were offset in part by $4.3 million of net gains on litigation-related matters at acquired businesses and $0.6 million of other non-cash income, net.

Analytical Instruments

In the first nine months of 2016, the Analytical Instruments segment recorded $117.9 million of net restructuring and other charges. The segment recorded charges to cost of revenues of $21.6 million, including $16.1 million to conform the accounting policies of FEI with the company's accounting policies and $5.5 million for the sales of inventory revalued at the date of acquisition. The segment recorded $40.9 million of charges to selling, general, and administrative expense, including $32.2 million for third-party transaction costs related to the acquisition of FEI, as well as $8.5 million of charges to conform the accounting policies of FEI with the company's accounting policies. The segment also recorded $58.1 million of cash restructuring costs primarily for severance obligations payable to former FEI executives, and charges associated with abandoned facilities, including remediation and other closure costs of a manufacturing facility in the U.S. These costs were offset in part by $2.7 million of gains on the sale of real estate.

Specialty Diagnostics

In the first nine months of 2016, the Specialty Diagnostics segment recorded $11.6 million of net restructuring and other charges including $10.0 million of charges for litigation-related matters, as well as $3.7 million of cash restructuring costs for severance and other costs associated with headcount reductions and facility consolidations. These charges were partially offset by $2.1 million of other income, primarily gains on the sale of real estate.

Laboratory Products and Services

In the first nine months of 2016, the Laboratory Products and Services segment recorded $23.8 million of net restructuring and other charges. The segment recorded charges to cost of revenues of $7.9 million, including $6.2 million for sales of inventories revalued at the date of acquisition, and $1.7 million for accelerated depreciation at facilities closing due to real estate consolidation. The segment also recorded $0.5 million of charges to selling, general and administrative expenses for accelerated depreciation at facilities closing due to real estate consolidation. The company recorded $10.1 million of cash restructuring costs, primarily for employee severance and other costs associated with headcount reductions and facility consolidations. In addition, the segment recorded $6.8 million of charges for an increase in environmental remediation cost estimates associated with a Superfund site in the U.S., offset in part by $1.3 million of gain on the settlement of litigation.

Corporate

In the first nine months of 2016, the company recorded $22.3 million of restructuring and other costs, principally within selling, general, and administrative expenses, including $17.2 million of charges for product liability litigation and $4.0 million of accelerated depreciation on information system to be abandoned due to integration synergies. The segment also recorded $1.5 million of restructuring charges for severance and costs associated with facility consolidation at its corporate operations. These charges were offset in part by $0.4 million of income from the settlement of a retirement plan.

The following table summarizes the cash components of the company’s restructuring plans. The non-cash components and other amounts reported as restructuring and other costs, net, in the accompanying statement of income have been summarized in the notes to the tables. Accrued restructuring costs are included in other accrued expenses in the accompanying balance sheet.



(In millions)	Severance			Abandonment of Excess Facilities			Other (a)			Total

Balance at December 31, 2015	$	15.2		$	13.1		$	3.0		$	31.3
Costs incurred in 2016 (c)	84.9			43.4			8.5			136.8
Reserves reversed (b)	(0.7		)	(0.2		)	(0.2		)	(1.1		)
Payments	(36.2		)	(16.6		)	(8.9		)	(61.7		)
Currency translation	0.2			—			—			0.2

Balance at October 1, 2016	$	63.4		$	39.7		$	2.4		$	105.5


(a)	Other includes relocation and moving expenses associated with facility consolidations, as well as employee retention costs which are accrued ratably over the period through which employees must work to qualify for a payment.


(b)	Represents reductions in cost of plans.


(c)	Excludes $5.2 million of charges, net, primarily associated with environmental and litigation-related matters and sales of real estate.

The company expects to pay accrued restructuring costs as follows: severance, employee-retention obligations and other costs, primarily through 2016; and abandoned-facility payments, over lease terms expiring through 2027.