Restructuring and Impairment Costs

12 Months Ended

Sep. 30, 2019

Restructuring and Related Activities [Abstract]

15. Restructuring and Impairment 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 $105 million. Of the restructuring costs recorded, $81 million relates to the EMEA segment, $16 million relates to the Americas segment and $8 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 2021. Also recorded in fiscal 2019 is $16 million of prior year underspend, a $9 million increase to a prior year reserve and $6 million of recoveries from a customer related to previous restructuring charges.

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


(in millions)	Employee Severance and Termination Benefits		Other		Currency Translation		Total
Original Reserve	$	101	$	4	$	—	$	105
Utilized—cash	(32)		—		—		(32)
Utilized—noncash	—		(1)		(2)		(3)

Balance at September 30, 2019	$	69	$	3	$	(2)	$	70

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 $5 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. In fiscal 2019 there was adjustment to this plan which resulted in additional $9 million of charges. 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 2021.

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


(in millions)	Employee Severance and Termination Benefits		Other		Currency Translation		Total
Original Reserve	$	68	$	3	$	—	$	71
Utilized—cash	(19)		—		—		(19)
Utilized—noncash	—		(2)		(2)		(4)
Balance at September 30, 2018	49		1		(2)		48
Reserve adjustment	9		—		—		9
Utilized—cash	(24)		—		—		(24)
Utilized—noncash	—		(1)		(2)		(3)
Noncash adjustment—underspend	(10)		—		—		(10)
Balance at September 30, 2019	$	24	$	—	$	(4)	$	20

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 2020.

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


(in millions)	Employee Severance and Termination Benefits		Other		Total
Original Reserve	$	42	$	4	$	46
Utilized—cash	(4)		(4)		(8)
Balance at September 30, 2017	38		—		38
Utilized—cash	(26)		—		(26)
Balance at September 30, 2018	12		—		12
Utilized—cash	(3)		—		(3)

Noncash adjustment—underspend	(4)		—		(4)


Balance at September 30, 2019	$	5	$	—	$	5

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		Long-Lived Asset Impairments		Other		Currency Translation		Total
Original Reserve	$	223	$	87	$	22	$	—	$	332
Utilized—cash	(29)		—		(1)		—		(30)
Utilized—noncash	—		(87)		—		(2)		(89)
Balance at September 30, 2016	194		—		21		(2)		213
Utilized—cash	(48)		—		(12)		—		(60)
Utilized—noncash	—		—		—		7		7
Balance at September 30, 2017	146		—		9		5		160
Utilized—cash	(55)		—		(9)		—		(64)
Utilized—noncash	—		—		—		(1)		(1)
Noncash adjustment—underspend	(20)		—		—		—		(20)
Balance at September 30, 2018	71		—		—		4		75
Utilized—cash	(45)		—		—		—		(45)
Utilized—noncash	—		—		—		(2)		(2)
Noncash adjustment—underspend	(1)		—		—		—		(1)
Balance at September 30, 2019	$	25	$	—	$	—	$	2	$	27

Adient's fiscal 2019, 2018, 2017 and 2016 restructuring plans included workforce reductions of approximately 8,600. 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 September 30, 2019, approximately 5,800 of the employees have been separated from Adient pursuant to the restructuring plans. In addition, the

restructuring plans included seventeen plant closures. As of September 30, 2019, fifteen of the seventeen 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.