Business realignment and acquisition integration charges

9 Months Ended

Mar. 31, 2023

Restructuring and Related Activities [Abstract]

Business realignment and acquisition integration charges

Business realignment and acquisition integration charges

We incurred business realignment and acquisition integration charges in the first nine months of fiscal 2023 and 2022. In both the first nine months of fiscal 2023 and 2022, business realignment charges included severance costs related to actions taken under the Company's simplification initiative aimed at reducing organizational and process complexity, as well as plant closures. In fiscal 2023, a majority of the business realignment charges were incurred in Europe. In fiscal 2022, a majority of the business realignment charges were incurred in North America and Europe. We believe the realignment actions will positively impact future results of operations, but will not have a material effect on liquidity and sources and uses of capital.

Business realignment charges by business segment are as follows:

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2023		2022		2023		2022
Diversified Industrial	$	8,075	$	2,771	$	14,464	$	8,835
Aerospace Systems	166		318		3,016		913
Other (income) expense, net	—		63		—		63

Reductions to our workforce made in connection with such business realignment charges by business segment are as follows:

	Three Months Ended		Nine Months Ended
	March 31,		March 31,
	2023	2022	2023	2022
Diversified Industrial	282	50	499	133
Aerospace Systems	14	4	30	9

The business realignment charges are presented in the Consolidated Statement of Income as follows:

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2023		2022*		2023		2022*
Cost of sales	$	5,033	$	1,178	$	10,746	$	2,311
Selling, general and administrative expenses	3,208		1,911		6,734		7,437
Other (income) expense, net	—		63		—		63
*Prior period amounts have been reclassified to reflect the income statement reclassification as described in Note 1.

During the first nine months of fiscal 2023, approximately $15 million in payments were made relating to business realignment charges. Remaining payments related to business realignment actions of approximately $11 million, a majority of which are expected to be paid by December 31, 2023, are primarily reflected within the other accrued liabilities caption in the Consolidated Balance Sheet. Additional charges may be recognized in future periods related to the business realignment actions described above, the timing and amount of which are not known at this time.

In addition to the business realignment charges discussed above, we also incurred $20 million of expense in the prior-year quarter and first nine months of fiscal 2022 as a result of our exit of business operations in Russia. These charges primarily consisted of write-downs of inventory and other working capital items and $8 million of foreign currency translation expense reclassified from accumulated other comprehensive income. Within the business segment information in Note 17, $7 million of expense was recorded in the other (income) expense, net caption, while the remainder of the charge was split evenly between the Aerospace Systems Segment and the Diversified Industrial International businesses.

We also incurred the following acquisition integration charges:

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2023		2022		2023		2022
Diversified Industrial	$	5,395	$	933	$	7,276	$	2,942
Aerospace Systems	25,849		—		69,377		—

Charges incurred in fiscal 2023 and 2022 relate to the acquisitions of Meggitt and LORD Corporation, respectively. In both fiscal 2023 and 2022, these charges were primarily included in SG&A within the Consolidated Statement of Income.