E-Z-GO 2001 Annual Report Download - page 26

Special Charges, Net and Other Costs Related to Restructuring
2001 vs. 2000
Textron recorded $437 million in special charges in 2001 in comparison to $483 million in 2000. Special
charges in 2001 included $319 million in goodw ill and intangible asset impairment w rite-dow ns, $81
million in restructuring expense, $28 million in fixed asset impairment w rite-dow ns, and $9 million in w rite-
dow ns of e-business investments. In 2000, special charges included $349 million in goodw ill impairment
write-downs, $17 million in restructuring expense, and $117 million in an impairment charge related to
e-business investments.
In the fourth quarter of 2000, Textron initiated its restructuring program to strengthen operating efficien-
cies and better align its operations with current economic and market conditions. Projects include
reducing overhead and closing, consolidating and dow nsizing manufacturing facilities, reducing corporate
and segment personnel, consolidating operations and exiting non-core product lines throughout Textron.
The restructuring program costs and savings have been driven primarily from efforts w ithin the Industrial
Products and Fastening Systems segments. Under the restructuring program, Textron’s workforce has
been reduced by approximately 5,700 employees through December 29, 2001, including approximately
2,400 in Industrial Products, 1,600 in Fastening Systems, 900 in Automotive, 600 in Aircraft and 200 in Finance
and Corporate. Excluding Textron Automotive Trim, total headcount reductions have been approximately
5,000. Through the consolidations, Textron is closing 59 facilities, including 30 manufacturing plants
representing over 2.2 million square feet of manufacturing floor space. As of December 29, 2001, 44 facili-
ties have been closed primarily in the Industrial Products and Fastening Systems segments.
In 2001, restructuring expenses of $81 million w ere incurred in Industrial Products ($27 million), Fastening
Systems ($25 million), Automotive ($14 million), Aircraft ($5 million), Finance ($3 million) and Corporate
($7 million). In conjunction w ith the restructuring efforts, Textron recorded write-downs for fixed asset
impairment of $28 million in Fastening Systems ($18 million), Industrial Products ($7 million) and Automotive
($3 million). In 2001, Textron also incurred $34 million in costs related to restructuring in Aircraft ($10
million), Industrial Products ($12 million), Fastening Systems ($8 million) and Automotive ($4 million),
which have been included in segment profit.
Under the expanded restructuring program, Textron expects to incur total special charges and costs
related to restructuring, excluding goodw ill write-downs, of at least $325 million, of w hich $160 million has
been expended at year-end 2001. The program includes an additional w orkforce reduction of approximately
2,300 and should be substantially completed by the end of 2002. Excluding Textron Automotive Trim,
Textron expects a total reduction of approximately 7,300 employees, representing approximately 12% of
Textron’s global w orkforce since the restructuring w as first announced. Restructuring savings, excluding
projects at Textron Automotive Trim, w ere $124 million in 2001 and are expected to be at least $225 million
in 2002 and $250 million in 2003.
During the third quarter of 2001, Textron performed a long-lived asset impairment review as a result of
certain impairment indicators being identified. These key impairment indicators included OmniQuip’s
operating performance against plan despite restructuring efforts to improve operating efficiencies and
streamline operations. Additionally, the strategic review process completed in August 2001 confirmed that
the economic and market conditions combined w ith the saturation of light construction equipment
handlers in the market had negatively impacted the projected operating results for the foreseeable future.
The impairment calculation resulted in a third quarter impairment charge in the Industrial Products segment
of $317 million, including goodw ill of $306 million and other intangible assets of $11 million. OmniQuip has
approximately $107 million in remaining long-lived assets which are deemed substantially recoverable.
Textron continues to address and execute strategic initiatives to enhance the overall profitability of
OmniQuip. Through December 29, 2001, OmniQuip’s workforce has been reduced by over 700
employees, along with the closure of five facilities including one plant.
2000 vs. 1999
Textron recorded $483 million in special charges, net in 2000 in comparison to a $1 million net gain in
1999. In 2000, special charges included $349 million in goodw ill impairment w rite-downs, $17 million in
restructuring expense, and $117 million in an impairment charge related to e-business investments. The
restructuring expense of $17 million w as associated w ith the modernization and consolidation of
manufacturing facilities in the Automotive ($2 million) and Industrial Products ($15 million) segments.
24 Textron Annual Report