CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES

3 Months Ended

Sep. 30, 2019

CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES

CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES

NOTE 4 – 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 September 30, 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 September 30, 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
Three months ended September 30, 2019		—		2		1		22		25
Cumulative through September 30, 2019	$	14	$	57	$	458	$	287	$	816

	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
Three months ended September 30, 2019		—		—		—		1		1
Cumulative through September 30, 2019	$	445	$	4	$	3	$	6	$	458

Changes in accrued restructuring charges for the three months ended September 30, 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		(29)		—		—		(1)		(30)
Balance at September 30, 2019	$	173	$	—	$	—	$	1	$	174

Accrued restructuring charges at September 30, 2019 are expected to result in cash expenditures funded from cash provided by operations of approximately $108 million, $44 million, $19 million and $3 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.