Quarterly report pursuant to Section 13 or 15(d)

Strategic Realignment Plan (Notes)

Strategic Realignment Plan (Notes)
6 Months Ended
Mar. 27, 2016
Strategic Realignment Plan [Abstract]  
Strategic Realignment Plan
Note 10. Strategic Realignment Plan
On July 22, 2015, the Company announced a Strategic Realignment Plan designed to improve execution, enhance financial performance and drive profitable growth as the Company works to create sustainable long-term value for stockholders. As part of this, among other actions, the Company is implementing a cost reduction plan, which includes a series of targeted reductions across the Company’s businesses, particularly in QCT, and a reduction to its annual share-based compensation grants. The Company expects these cost reduction initiatives to be substantially implemented by the end of fiscal 2016. During the six months ended March 27, 2016, the Company recorded restructuring charges of $89 million, including consulting costs of $48 million and severance costs of $37 million, restructuring-related charges of $40 million, which primarily consisted of asset impairments, and a $48 million gain on the sale of the Company’s business that provided augmented reality applications, since such sale was executed in connection with the Strategic Realignment Plan, all of which were included in other income (Note 2) in reconciling items (Note 8). Restructuring activities were initiated in the fourth quarter of fiscal 2015, and a total of $271 million in net restructuring and restructuring-related charges were incurred through the second quarter of fiscal 2016. In connection with this plan, the Company expects to incur additional restructuring and restructuring-related charges of approximately $25 million to $125 million, which primarily consist of severance and consulting costs. The remaining costs are expected to be incurred in fiscal 2016 and fiscal 2017, and the majority are expected to be settled in cash.
The restructuring accrual, a portion of which is included in payroll and other benefits related liabilities with the remainder included in other current liabilities, is expected to be substantially paid within the next 12 months. Changes in the restructuring accrual during the six months ended March 27, 2016 were as follows (in millions):
Severance Costs
Beginning balance of restructuring accrual



Additional costs



Cash payments
Ending balance of restructuring accrual