NOTE 10—SEVERANCE
In connection with the transformation of the Company’s business model, the Company incurs costs related to employee severance. The Company records a liability for these costs when it is probable that employees will be entitled to termination benefits and the amounts can be reasonably estimated. The liability related to these actions is included in accrued and other current liabilities in the Consolidated Statements of Financial Position. The liability related to these actions was $40 million and $110 million for fiscal years ended January 29, 2016 and January 30, 2015, respectively.
The following table sets forth the activity related to the Company’s severance liability for the respective periods:
| Severance Costs |
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| (in millions) | ||||
| Predecessor |
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| Balance at February 1, 2013 |
$ | 53 | ||
| Severance charges to provision |
237 | |||
| Cash paid and other |
(125 | ) | ||
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| Balance at October 28, 2013 |
165 | |||
| Successor |
||||
| Balance at October 29, 2013 |
— | |||
| Fair value recognized through purchase accounting |
165 | |||
| Severance charges to provision |
399 | |||
| Cash paid and other |
(66 | ) | ||
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| Balance at January 31, 2014 |
498 | |||
| Severance charges to provision |
77 | |||
| Cash paid and other |
(465 | ) | ||
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| Balance at January 30, 2015 |
110 | |||
| Severance charges to provision |
52 | |||
| Cash paid and other |
(122 | ) | ||
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| Balance at January 29, 2016 |
$ | 40 | ||
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Severance costs are included in cost of net revenue, selling, general, and administrative expenses, and research, development, and engineering expense in the Consolidated Statement of Income as follows:
| Successor | Predecessor | |||||||||||||||
| Fiscal Year Ended January 29, 2016 |
Fiscal Year Ended January 30, 2015 |
October 29, 2013 through January 31, 2014 |
February 2, 2013 through October 28, 2014 |
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| (in millions) | ||||||||||||||||
| Severance: |
||||||||||||||||
| Cost of net revenue |
$ | 15 | $ | 36 | $ | 68 | $ | 33 | ||||||||
| Selling, general, and administrative |
18 | 36 | 293 | 192 | ||||||||||||
| Research, development, and engineering |
19 | 5 | 38 | 12 | ||||||||||||
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| Total |
$ | 52 | $ | 77 | $ | 399 | $ | 237 | ||||||||
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- F-40 -
DENALI HOLDING INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
