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CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES

6 Months Ended

Dec. 31, 2019

CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES

CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES

NOTE 5 – CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES

In May 2016, the Company announced a multi-year initiative (“Leading Beauty Forward” or “LBF”) to build on its strengths and better leverage its cost structure to free resources for investment to continue its growth momentum. LBF is designed to enhance the Company’s go-to-market capabilities, reinforce its leadership in global prestige beauty and continue creating sustainable value. As of June 30, 2019, the Company concluded the approvals of all major initiatives under LBF related to the optimization of select corporate functions, supply chain activities, and corporate and regional market support structures, as well as the exit of underperforming businesses, and expects to substantially complete those initiatives through fiscal 2021. The approved restructuring and other charges expected to be incurred were:


		Sales
		Returns						Operating Expenses
		(included in						Restructuring			Other
(In millions)		Net Sales)			Cost of Sales			Charges			Charges			Total
Total Charges Approved
Cumulative through December 31, 2019		$	14		$	88		$	507		$	358		$	967


		Employee-			Asset-
		Related			Related			Contract			Other Exit
(In millions)		Costs			Costs			Terminations			Costs			Total
Restructuring Charges Approved
Cumulative through December 31, 2019		$	461		$	7		$	25		$	14		$	507

The Company records approved charges associated with restructuring and other activities once the relevant accounting criteria have been met. Total cumulative charges recorded associated with restructuring and other activities for LBF were:


		Sales
		Returns						Operating Expenses
		(included in						Restructuring			Other
(In millions)		Net Sales)			Cost of Sales			Charges			Charges			Total
Total Charges
Cumulative through June 30, 2019		$	14		$	55		$	457		$	265		$	791
Six months ended December 31, 2019			—			8			1			29			38
Cumulative through December 31, 2019		$	14		$	63		$	458		$	294		$	829


		Employee-			Asset-
		Related			Related			Contract			Other Exit
(In millions)		Costs			Costs			Terminations			Costs			Total
Restructuring Charges
Cumulative through June 30, 2019		$	445		$	4		$	3		$	5		$	457
Six months ended December 31, 2019			—			—			—			1			1
Cumulative through December 31, 2019		$	445		$	4		$	3		$	6		$	458

Changes in accrued restructuring charges for the six months ended December 31, 2019 were:


		Employee-			Asset-
		Related			Related			Contract			Other Exit
(In millions)		Costs			Costs			Terminations			Costs			Total
Balance at June 30, 2019		$	202		$	—		$	—		$	1		$	203
Charges			—			—			—			1			1
Cash payments			(52)			—			—			(2)			(54)
Balance at December 31, 2019		$	150		$	—		$	—		$	—		$	150

Accrued restructuring charges at December 31, 2019 are expected to result in cash expenditures funded from cash provided by operations of approximately $63 million, $62 million, $20 million and $5 million for the remainder of fiscal 2020 and for fiscal 2021, 2022 and 2023, respectively.

Additional information about LBF is included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019.