Significant Restructuring Costs

9 Months Ended

Jun. 30, 2021

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 various restructuring plans as necessary. Restructuring plans generally result in charges for workforce reductions, plant closures, asset impairments and other related costs which are reported as restructuring and impairment costs in the Company’s consolidated statements of income. The Company expects the restructuring actions to reduce cost of sales and SG&A due to reduced employee-related costs, depreciation and amortization expense.

In fiscal 2021, the Company committed to a significant restructuring plan ("2021 Plan"). During the three and nine months ended June 30, 2021, the Company recorded $79 million and $175 million of restructuring and impairment costs in the consolidated statements of income, respectively. The total amount expected to be incurred for this restructuring plan is $385 million across all segments and at Corporate. Of the restructuring and impairment costs recorded in the nine months ended June 30, 2021, $77 million related to the Global Products segment, $44 million related to the Building Solutions North America segment, $20 million related to the Building Solutions EMEA/LA segment, $19 million related to Corporate and $15 million related to the Building Solutions Asia Pacific segment.

The following table summarizes the changes in the Company’s 2021 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	$	32	$	54	$	10	$	96
Utilized—cash	(2)		—		(3)		(5)
Utilized—noncash	—		(54)		—		(54)

Balance at March 31, 2021	$	30	$	—	$	7	$	37
Additional restructuring costs	10		40		29		79
Utilized—cash	(7)		—		(11)		(18)
Utilized—noncash	—		(40)		—		(40)
Balance at June 30, 2021	$	33	$	—	$	25	$	58

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. This is the total amount incurred to date and the total amount expected to be incurred for this restructuring plan. 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	$	196	$	96	$	5	$	297
Utilized—cash	(92)		—		(3)		(95)
Utilized—noncash	—		(96)		—		(96)
Currency translation	2		—		—		2
Balance at September 30, 2020	$	106	$	—	$	2	$	108
Utilized—cash	(62)		—		(2)		(64)

Currency translation	1		—		—		1
Balance at June 30, 2021	$	45	$	—	$	—	$	45

Also included in restructuring and impairment costs in the consolidated statements of income in fiscal 2020 are goodwill impairment related to the North America Retail reporting unit of $424 million and indefinite-lived intangible asset impairments of $62 million.

The Company's fiscal 2021 and 2020 restructuring plans included workforce reductions of approximately 8,400 employees. 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, 2021, approximately 6,700 of the employees have been separated from the Company pursuant to the restructuring plans.

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.