

12. Restructuring and Impairment Costs

Restructuring Costs

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

During fiscal 2019, Adient committed to a restructuring plan ("2019 Plan") of $80 million that was offset by $8 million of underspend in prior years. Of the restructuring costs recorded, $61 million relates to the EMEA segment, $13 million relates to the Americas segment and $6 million relates to the Asia segment. The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions. The restructuring actions are expected to be substantially completed by fiscal 2019.

The following table summarizes the changes in Adient's 2019 Plan reserve:



(in millions)	Employee Severance and Termination Benefits
Original Reserve	$	80
Utilized—cash	(13		)
Balance at March 31, 2019	$	67

In fiscal 2018, Adient committed to a restructuring plan ("2018 Plan") of $71 million that was offset by $20 million of underspend in the 2016 Plan and $7 million of underspend related to other plan years. Of the restructuring costs recorded, $52 million relates to the EMEA segment, $10 million relates to the Asia segment and $9 million relates to the Americas segment. This is the total amount expected to be incurred for this restructuring plan. The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions. The restructuring actions are expected to be substantially completed by fiscal 2019.

The following table summarizes the changes in Adient's 2018 Plan reserve:



(in millions)	Employee Severance and Termination Benefits			Other			Currency Translation			Total
Balance at September 30, 2018	$	49		$	1		$	(2	)	$	48
Utilized—cash	(16		)	—			—			(16		)
Utilized—noncash	—			(1		)	1			—
Noncash adjustment—underspend	(2		)	—			—			(2		)
Balance at March 31, 2019	$	31		$	—		$	(1	)	$	30

In fiscal 2017, Adient committed to a restructuring plan ("2017 Plan") and recorded $46 million of restructuring and impairment costs in the consolidated statements of income. Of the restructuring costs recorded, $34 million relates to the EMEA segment, $7 million relates to the Americas segment and $5 million relates to the Asia segment. This is the total amount expected to be incurred for this restructuring plan. The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions and plant closures. The restructuring actions are expected to be substantially complete in fiscal 2019.

The following table summarizes the changes in Adient's 2017 Plan reserve:



(in millions)	Employee Severance and Termination Benefits
Balance at September 30, 2018	$	12
Utilized—cash	(2		)
Utilized—noncash	(1		)
Noncash adjustment—underspend	(6		)
Balance at March 31, 2019	$	3

In fiscal 2016, Adient committed to a restructuring plan ("2016 Plan") and recorded $332 million of restructuring and impairment costs in the consolidated statements of income. This is the total amount expected to be incurred for this restructuring plan. The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions, plant closures and asset impairments. Of the restructuring and impairment costs recorded, $298 million relates to the EMEA segment, $32 million relates to the Americas segment and $2 million relates to the Asia segment. The asset impairment charge recorded during fiscal 2016 related primarily to information technology assets within the EMEA segment that will not be used going forward by Adient. The restructuring actions are expected to be substantially complete in fiscal 2021.

Since the announcement of the 2016 Plan in fiscal 2016, Adient has experienced lower employee severance and termination benefit cash payouts than previously calculated of approximately $20 million, due to changes in cost reduction actions. The planned workforce reductions disclosed for the 2016 Plan have been updated for Adient's revised actions.

The following table summarizes the changes in Adient's 2016 Plan reserve:



(in millions)	Employee Severance and Termination Benefits			Currency Translation			Total
Balance at September 30, 2018	$	71		$	4		$	75
Utilized—cash	(37		)	—			(37		)
Utilized—noncash	—			(2		)	(2		)
Balance at March 31, 2109	$	34		$	2		$	36

Adient's fiscal 2019, 2018, 2017 and 2016 restructuring plans included workforce reductions of approximately 7,300. 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 March 31, 2019, approximately 5,000 of the employees have been separated from Adient pursuant to the restructuring plans. In addition, the restructuring plans included fifteen plant closures. As of March 31, 2019, eleven of the fifteen plants have been closed.

Adient's 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 low cost countries in close proximity to customers. This ongoing analysis includes a review of its manufacturing, engineering, purchasing and administrative functions, as well as the overall global footprint for all its businesses. Because of the importance of new vehicle sales by major automotive manufacturers to operations, Adient is affected by the general business conditions in the automotive industry. Future adverse developments in the automotive industry could impact Adient's liquidity position, lead to impairment charges and/or require additional restructuring of its operations.

Impairment

In the second quarter of fiscal 2019, Adient concluded it had a triggering event requiring assessment of impairment for certain of its former SS&M segment long-lived assets within the EMEA ($55 million) and Americas ($11 million) segments due to declines in actual and forecasted performance that worsened during the second quarter of fiscal 2019 as compared to originally forecasted results. As a result, Adient reviewed the long-lived assets for impairment and recorded a $66 million non-cash pre-tax impairment charge within restructuring and impairment costs on the consolidated statements of income (loss). The impairment charge related to long-lived assets in North America and Europe asset groups in support of current programs. Of the $66 million impairment charge, $62 million relates to fixed assets, and $4 million relates to customer relationships. The impairment was measured under a market approach utilizing appraisal techniques to determine fair values of the impaired assets. This method is consistent with methods Adient employed in prior periods to value other long-lived assets. The inputs utilized in the analysis are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair value measurement" and primarily consist of estimated salable values and third party appraisal techniques such as market comparables. To the extent that the profitability on current or future programs decline as compared to forecasted profitability or if adverse changes occur to key assumptions or other fair value measurement inputs, further impairment of long-lived assets could occur in the future. During the first quarter of fiscal 2019, impairments of $6 million were recorded related to assets held for sale.

During the second quarter of fiscal 2018, in conjunction with a change in segment reporting at that time, a $299 million goodwill impairment charge was recorded related to the former SS&M segment.