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Significant Restructuring Costs

9 Months Ended

Jun. 30, 2020

Restructuring Charges [Abstract]

Significant Restructuring and Impairment Costs

Significant Restructuring and Impairment Costs

To better align its resources with its growth strategies and reduce the cost structure of its global operations in certain underlying markets, the Company commits to restructuring plans as necessary.

In fiscal 2020, the Company committed to a significant restructuring plan ("2020 Plan") and recorded $297 million of restructuring and impairment costs in the consolidated statements of income, of which $111 million was recorded in the first quarter and $186 million was recorded in the third quarter of fiscal 2020. This is the total amount incurred to date and the total amount expected to be incurred for this restructuring plan. The restructuring actions related primarily to cost reduction initiatives. The costs consist primarily of workforce reductions, plant closures and asset impairments. Of the restructuring and impairment costs recorded, $136 million related to the Global Products segment, $64 million related to the Building Solutions North America segment, $49 million related to the Building Solutions Asia Pacific segment, $43 million related to the Building Solutions EMEA/LA segment and $5 million related to Corporate. The restructuring actions are expected to be substantially complete in fiscal 2021.

The following table summarizes the changes in the Company’s 2020 Plan reserve, included within other current liabilities in the consolidated statements of financial position (in millions):

			Employee Severance and Termination Benefits						Long-Lived Asset Impairments						Other												Total
Original reserve			$	54					$	54					$	3											$	111
Utilized—cash			(8)						—						—												(8)
Utilized—noncash			—						(54)						—												(54)
Balance at December 31, 2019			$	46					$	—					$	3											$	49
Utilized—cash			(24)						—						(1)												(25)
Balance at March 31, 2020			$	22					$	—					$	2											$	24
Additional reserve			142						42						2												186
Utilized—cash			(28)						—						(1)												(29)
Utilized—noncash			—						(42)						—												(42)
Balance at June 30, 2020			$	136					$	—					$	3											$	139

In the third quarter of fiscal 2020, the Company recorded $424 million of restructuring and impairment costs in the consolidated statements of income for goodwill impairment related to the North America Retail reporting unit. Refer to Note 8, "Goodwill and Other Intangible Assets," of the notes to consolidated financial statements for further information regarding goodwill impairments.

In the second quarter of fiscal 2020, the Company recorded $62 million of restructuring and impairment costs in the consolidated statements of income for indefinite-lived intangible asset impairments. Refer to Note 8, "Goodwill and Other Intangible Assets," of the notes to consolidated financial statements for further information regarding the indefinite-lived intangibles impairments.

In fiscal 2018, the Company committed to a significant restructuring plan ("2018 Plan") and recorded $255 million of restructuring and impairment costs for continuing operations in the consolidated statements of income. This was the total amount incurred to date and the total amount expected to be incurred for this restructuring plan. The restructuring actions related to cost reduction initiatives in the Company’s Building Technologies & Solutions businesses and at Corporate. The costs consist primarily of workforce reductions, plant closures and asset impairments. Of the restructuring and impairment costs recorded, $113 million related to the Global Products segment, $56 million related to the Building Solutions EMEA/LA segment, $50 million related to Corporate, $20 million related to the Building Solutions North America segment and

$16 million related to the Building Solutions Asia Pacific segment. The restructuring actions are expected to be substantially complete in 2020.

Additionally, the Company recorded $8 million of restructuring and impairment costs related to Power Solutions in fiscal 2018. This is reported within discontinued operations.

The following table summarizes the changes in the Company’s 2018 Plan reserve, included within other current liabilities in the consolidated statements of financial position (in millions):

			Employee Severance and Termination Benefits						Long-Lived Asset Impairments						Other						Currency Translation						Total
Original reserve			$	209					$	42					$	12					$	—					$	263
Utilized—cash			(45)						—						(2)						—						(47)
Utilized—noncash			—						(42)						—						—						(42)
Balance at September 30, 2018			$	164					$	—					$	10					$	—					$	174
Utilized—cash			(61)						—						(6)						—						(67)
Utilized—noncash			—						—						—						(1)						(1)
Transfer to liabilities held for sale			(4)						—						—						—						(4)
Balance at September 30, 2019			$	99					$	—					$	4					$	(1)					$	102
Utilized—cash			(30)						—						—						—						(30)
Utilized—noncash			—						—						—						1						1
Adoption of ASC 8421			—						—						(4)						—						(4)
Balance at June 30, 2020			$	69					$	—					$	—					$	—					$	69

¹Represents liability for facility closings recorded as an offset to right-of-use asset upon adoption of ASC 842.

In fiscal 2017, the Company committed to a significant restructuring plan ("2017 Plan") and recorded $347 million of restructuring and impairment costs for continuing operations in the consolidated statements of income. This was the total amount incurred to date and the total amount expected to be incurred for this restructuring plan. The restructuring actions related to cost reduction initiatives in the Company’s Building Technologies & Solutions businesses and at Corporate. The costs consist primarily of workforce reductions, plant closures and asset impairments. Of the restructuring and impairment costs recorded, $166 million related to Corporate, $74 million related to the Building Solutions EMEA/LA segment, $59 million related to the Building Solutions North America segment, $32 million related to the Global Products segment and $16 million related to the Building Solutions Asia Pacific segment. The restructuring actions are expected to be substantially complete in fiscal 2020.

Additionally, the Company recorded $20 million of restructuring and impairment costs related to Power Solutions in fiscal 2017. This is reported within discontinued operations.

The following table summarizes the changes in the Company’s 2017 Plan reserve, included within other current liabilities in the consolidated statements of financial position (in millions):

			Employee Severance and Termination Benefits						Long-Lived Asset Impairments						Other						Currency Translation						Total
Original reserve			$	276					$	77					$	14					$	—					$	367
Utilized—cash			(75)						—						—						—						(75)
Utilized—noncash			—						(77)						(1)						—						(78)
Adjustment to restructuring reserves			25						—						—						—						25
Balance at September 30, 2017			$	226					$	—					$	13					$	—					$	239
Utilized—cash			(152)						—						(6)						—						(158)
Utilized—noncash			—						—						—						(1)						(1)
Balance at September 30, 2018			$	74					$	—					$	7					$	(1)					$	80
Utilized—cash			(11)						—						(2)						—						(13)
Utilized—noncash			—						—						—						(3)						(3)
Transfer to liabilities held for sale			(3)						—						—						—						(3)
Balance at September 30, 2019			$	60					$	—					$	5					$	(4)					$	61
Utilized—cash			(35)						—						—						—						(35)
Adoption of ASC 8421			—						—						(5)						—						(5)
Balance at June 30, 2020			$	25					$	—					$	—					$	(4)					$	21

¹Represents liability for facility closings recorded as an offset to right-of-use asset upon adoption of ASC 842.

The Company's fiscal 2020, 2018 and 2017 restructuring plans included workforce reductions of approximately 16,400 employees (14,100 for the Building Technologies & Solutions business and 2,300 for Corporate). Restructuring charges associated with employee severance and termination benefits are paid over the severance period granted to each employee or on a lump sum basis in accordance with individual severance agreements. As of June 30, 2020, approximately 10,300 of the employees have been separated from the Company pursuant to the restructuring plans. In addition, the restructuring plans included nine plant closures in the Building Technologies & Solutions business. As of June 30, 2020, eight of the nine plants have been closed.

Company management closely monitors its overall cost structure and continually analyzes each of its businesses for opportunities to consolidate current operations, improve operating efficiencies and locate facilities in close proximity to customers. This ongoing analysis includes a review of its manufacturing, engineering and purchasing operations, as well as the overall global footprint for all its businesses.

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- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 420
-URI http://asc.fasb.org/topic&trid=2175745

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- References

No definition available.

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