IMPAIRMENT, RESTRUCTURING AND OTHER

Activity described herein is classified within the “Cost of sales—impairment, restructuring and other,” “Impairment, restructuring and other” and “Income (loss) from discontinued operations, net of tax” lines in the Consolidated Statements of Operations.

The following table details impairment, restructuring and other charges (recoveries) during fiscal 2018, fiscal 2017 and fiscal 2016:



	Year Ended September 30,
	2018		2017		2016
	(In millions)
Cost of sales—impairment, restructuring and other:
Restructuring and other charges	$	12.3	$	—	$	5.9
Property, plant and equipment impairments	8.2		—		—
Operating expenses:
Restructuring and other charges (recoveries), net	20.2		3.9		(51.5		)
Goodwill and intangible asset impairments	112.1		1.0		—
Impairment, restructuring and other charges (recoveries) from continuing operations	$	152.8	$	4.9	$	(45.6	)
Restructuring and other charges from discontinued operations	86.8		15.9		19.7
Total impairment, restructuring and other charges (recoveries)	$	239.6	$	20.8	$	(25.9	)

The following table summarizes the activity related to liabilities associated with restructuring and other, excluding insurance reimbursement recoveries, during fiscal 2018, fiscal 2017 and fiscal 2016:



	Year Ended September 30,
	2018			2017			2016
	(In millions)
Amounts accrued for restructuring and other at beginning of year	$	12.1		$	20.8		$	28.1
Restructuring and other charges from continuing operations	32.7			8.3			10.3
Restructuring and other charges from discontinued operations	86.8			15.9			19.7
Payments and other	(19.4		)	(32.9		)	(37.3		)
Amounts accrued for restructuring and other at end of year	$	112.2		$	12.1		$	20.8

Included in restructuring accruals, as of September 30, 2018, is $0.8 million that is classified as long-term. Payments against the long-term accruals will be incurred as the employees covered by the restructuring plan retire or through the passage of time. The remaining amounts accrued will continue to be paid out over the course of the next twelve months.

Project Catalyst

In connection with the acquisition of Sunlight Supply during the third quarter of fiscal 2018, the Company announced the launch of an initiative called Project Catalyst. Project Catalyst is a company-wide restructuring effort to reduce operating costs throughout the U.S. Consumer, Hawthorne and Other segments and drive synergies from recent acquisitions within Hawthorne. The Company recognized charges of $29.4 million related to Project Catalyst during fiscal 2018. During fiscal 2018, the Company’s Hawthorne segment executed facility closures and consolidations, terminated employees in duplicate roles, and recognized employee termination benefits of $0.3 million, impairment of property, plant and equipment of $2.9 million, and facility closure costs of $9.2 million in the “Cost of sales—impairment, restructuring and other” line in the Consolidated Statements of Operations. The Company’s Hawthorne segment also recognized employee termination benefits of $3.5 million and facility closure costs of $1.9 million in the “Impairment, restructuring and other” line in the Consolidated Statement of Operations. The Company’s U.S. Consumer segment, in connection with an announced facility closure, recognized employee termination benefits of $1.6 million, impairment of property, plant and equipment of $5.3 million, and facility closure costs of $1.3 million during fiscal 2018 in the “Cost of sales—impairment, restructuring and other” line in the Consolidated Statements of Operations. The Company’s U.S. Consumer segment also recognized employee termination benefits of $3.4 million in the “Impairment, restructuring and other” line in the Consolidated Statement of Operations. Costs incurred to date since the inception of Project Catalyst are $17.8 million for the Hawthorne segment and $11.6 million for the U.S. Consumer segment.

Project Focus

In the first quarter of fiscal 2016, the Company announced a series of initiatives called Project Focus designed to maximize the value of its non-core assets and focus on emerging categories of the lawn and garden industry in its core U.S. business. During fiscal 2018, the Company’s U.S. Consumer segment recognized adjustments of $0.1 million related to previously recognized termination benefits associated with Project Focus in the “Impairment, restructuring and other” line in the Consolidated Statements of Operations. During fiscal 2017, the Company recognized restructuring costs related to termination benefits and facility closure costs of $8.3 million in the “Impairment, restructuring and other” line in the Consolidated Statements of Operations, including $6.7 million for the U.S. Consumer segment, $0.9 million for the Hawthorne segment and $0.7 million for the Other segment. During fiscal 2016, the Company recognized restructuring costs related to termination benefits of $3.9 million related to Project Focus in the “Impairment, restructuring and other” line in the Consolidated Statements of Operations. Costs incurred to date since the inception of the current Project Focus initiatives are $10.0 million for the U.S. Consumer segment, $0.9 million for the Hawthorne segment and $1.2 million for the Other segment, related to transaction activity, termination benefits and facility closure costs.

On April 13, 2016, as part of Project Focus, the Company completed the contribution of the SLS Business to the TruGreen Joint Venture. Refer to “NOTE 2. DISCONTINUED OPERATIONS” for more information. During fiscal 2017 and fiscal 2016, the Company recognized $0.8 million and $4.6 million, respectively, in transaction related costs associated with the divestiture of the SLS Business in the “Income (loss) from discontinued operations, net of tax” line in the Consolidated Statements of Operations. During fiscal 2016, the Company recognized a pre-tax charge of $9.0 million for the resolution of a prior SLS Business litigation matter in the “Income (loss) from discontinued operations, net of tax” line in the Consolidated Statements of Operations.

On August 31, 2017, the Company completed the sale of the International Business. Refer to “NOTE 2. DISCONTINUED OPERATIONS” for more information. During fiscal 2018, fiscal 2017 and fiscal 2016, the Company recognized $1.8 million, $15.5 million and $2.5 million, respectively, in transaction related costs associated with the sale of the International Business as well as termination benefits and facility closure costs of zero, $(0.4) million and $3.6 million, respectively, in the “Income (loss) from discontinued operations, net of tax” line in the Consolidated Statements of Operations.

Bonus S

During the third quarter of fiscal 2015, the Company’s U.S. Consumer segment began experiencing an increase in certain consumer complaints related to the reformulated Bonus^® S fertilizer product sold in the southeastern United States during fiscal 2015 indicating customers were experiencing damage to their lawns after application. In fiscal 2016, the Company incurred $6.4 million in costs related to resolving these consumer complaints and the recognition of costs the Company expected to incur for consumer claims in the “Impairment, restructuring and other” and the “Cost of sales—impairment, restructuring and other” lines in the Consolidated Statements of Operations. Additionally, the Company recorded offsetting insurance reimbursement recoveries of $55.9 million in fiscal 2016 in the “Impairment, restructuring and other” line in the Consolidated Statements of Operations. Costs incurred to date since the inception of this matter were $73.8 million, partially offset by insurance reimbursement recoveries of $60.8 million.

Other

During fiscal 2018, the Company recognized a non-cash impairment charge of $94.6 million related to a goodwill impairment in the Hawthorne segment in the “Impairment, restructuring and other” line in the Consolidated Statements of Operations as a result of the Company’s annual fourth quarter quantitative goodwill impairment test. Refer to “NOTE 4. GOODWILL AND INTANGIBLE ASSETS, NET” for more information.

During fiscal 2018, the Company recognized a non-cash impairment charge of $17.5 million related to the settlement of a portion of certain previously acquired customer relationships due to the acquisition of Sunlight Supply in the “Impairment, restructuring and other” line in the Consolidated Statement of Operations. Refer to “NOTE 7. ACQUISITIONS AND INVESTMENTS” for more information.

During fiscal 2018, the Company recognized a pre-tax charge of $85.0 million for a probable loss related to the previously disclosed legal matter In re Morning Song Bird Food Litigation in the “Income (loss) from discontinued operations, net of tax” line in the Consolidated Statements of Operations. Refer to “NOTE 19. CONTINGENCIES” for more information.

During fiscal 2018, the Company recognized a charge of $11.7 million for a probable loss related to the previously disclosed legal matter In re Scotts EZ Seed Litigation in the “Impairment, restructuring and other” line in the Consolidated Statements of Operations. Refer to “NOTE 19. CONTINGENCIES” for more information.

During fiscal 2017, the Company recognized a recovery of $4.4 million related to the reduction of a contingent consideration liability associated with a historical acquisition and recorded a $1.0 million impairment charge on the write-off of a trademark asset due to recent performance and future growth expectations within the “Impairment, restructuring and other” line in the Consolidated Statements of Operations.