Restructuring and Impairment Costs

12 Months Ended

Sep. 30, 2021

Restructuring and Related Activities [Abstract]

Restructuring and Impairment Costs

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 2021, Adient committed to a restructuring plan ("2021 Plan") of $27 million that was offset by $16 million of prior year underspend. Of the restructuring costs recorded, $23 million related to the EMEA segment, $3 million related to the Americas segment, and $1 million relates to the Asia segment. The restructuring actions relate to cost reduction initiatives and consist primarily of workforce reductions and lease contract terminations. The restructuring actions are expected to be substantially completed in fiscal 2022.

(in millions)	Employee Severance and Termination Benefits		Total
Original reserve	$	27	$	27
Utilized—cash	(5)		(5)
Balance at September 30, 2021	$	22	$	22

During fiscal 2020, Adient committed to a restructuring plan ("2020 Plan") of $205 million. Of the restructuring costs recorded, $20 million relates to the Americas segment, $175 million relates to the EMEA segment and $10 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 2024. Also recorded in fiscal 2020 is $20 million of underspend related to prior year plan reserves. The restructuring actions are expected to be substantially completed by fiscal 2022.

The following table summarizes the changes in Adient's 2020 Plan reserve:

(in millions)	Employee Severance and Termination Benefits		Other		Currency Translation		Total
Original Reserve	$	203	$	2	$	—	$	205
Utilized—cash	(35)		—		—		(35)
Noncash adjustment—other	—		(2)		1		(1)
Balance at September 30, 2020	$	168	$	—	$	1	$	169
Utilized—cash	$	(87)	$	—	$	—	(87)
Noncash adjustment—underspend/other	$	(6)	$	—	$	1	(5)
Balance at September 30, 2021	$	75	$	—	$	2	$	77

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 2022. 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
Utilized—cash	(30)		—		—		(30)
Utilized—noncash	—		—		2		2
Noncash adjustment—underspend	(7)		—		—		(7)
Balance at September 30, 2020	$	32	$	3	$	—	$	35
Utilized—cash	(24)		—		—		(24)
Noncash adjustment—underspend/other	—		(3)		1		(2)
Balance at September 30, 2021	$	8	$	—	$	1	$	9

During fiscal 2021, there was $20 million of cash utilized against the 2018, 2017 and 2016 Plan's reserve balances. The majority of the cash utilized during the period was related to the 2016 Plan's reserve balance. The 2018, 2017, and 2016 Plan's reserve balances at September 30, 2021 were $3 million, $2 million, and $2 million, respectively.

Adient's restructuring plans have included workforce reductions of approximately 18,000. 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, 2021, approximately 15,000 of the employees have been separated from Adient pursuant to the restructuring plans. In addition, the restructuring plans included twenty-five plant closures. As of September 30, 2021, nineteen of the twenty-five 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, particularly related to the COVID-19 pandemic and supply chain disruptions, could impact Adient's liquidity position, lead to impairment charges and/or require additional restructuring of its operations.