E-Z-GO 2001 Annual Report Download - page 58

at Fastening Systems. As of December 29, 2001, Textron has reduced its w orkforce by approximately
5,700 employees and has closed 44 facilities, including 18 manufacturing plants, primarily in the Industrial
Products and Fastening Systems segments. In 2000, Textron recorded restructuring costs of $15 million
in Industrial Products and $2 million in Automotive for fixed asset impairment, severance-related benefits
and certain other exit costs.
An analysis of Textron’s special charges for restructuring and related reserve accounts for its current
program is summarized below :
Asset Facilities
(In millions) Impairments Severance & Other Total
Charges $ 1 $ 15 $ 1 $ 17
Utilized (1) (1) – (2)
Balance at December 30, 2000 $ – $ 14 $ 1 $ 15
Charges 28 77 4 109
Utilized (28) (60) (2) (90)
Balance at December 29, 2001 $– $31 $3 $34
The specific restructuring measures and associated estimated costs are based on Textron’s best judgment
under prevailing circumstances. Textron believes that the restructuring reserve balance of $34 million is
adequate to carry out the restructuring activities formally identified and committed to as of December 29,
2001 and anticipates that all actions related to these liabilities will be completed w ithin a tw elve-month
period.
Restructuring costs and asset impairment charges recorded in earnings have been included in special
charges, net on the consolidated statement of income. In 2001, Textron also incurred $34 million in costs
related to restructuring that have not been included in special charges, net. These expenses consist of costs
for outsourcing certain operations in the Aircraft segment, plant rearrangement, machinery and equipment
relocation, employee replacement and relocation costs, and are included in cost of sales and selling and
administrative expenses w ithin segment profit.
In 1999, Textron recorded severance of $28 million and an asset impairment charge of $14 million primarily
related to cost reduction efforts in the Industrial Products segment designed to significantly reduce
headcount by downsizing an underperforming plant in Europe, the announcement of the closing of seven
facilities, and through targeted headcount reductions across most of its divisions. Textron also reversed
$24 million of reserves no longer deemed necessary after it w as determined that certain projects would be
cancelled. These actions were completed by December 30, 2000, w ith substantially all reserve spending
occurring in 1999 and 2000.
E-business Investment and Other
During 2001, Textron recorded a $6 million impairment charge related to its e-business securities and
realized a $3 million net loss on the sale of its remaining e-business securities. In 2000, Textron recorded
an impairment charge of $117 million related to these investment securities. These charges are included
in special charges, net on the consolidated statement of income.
Special charges, net for 1999 include a gain of $19 million as a result of shares granted to Textron from
Manulife Financial Corporation’s initial public offering on their demutualization of the Manufacturers Life
Insurance Company.
In the normal course of business, Textron has entered into various joint venture agreements. At
December 29, 2001 and December 30, 2000, other assets includes $37 million and $29 million, respectively,
attributable to investments in unconsolidated joint ventures. Textron accounts for its interest in these
ventures under the equity method of accounting, and its equity in income (loss) from joint ventures for
the three years ended December 29, 2001 is reported in cost of sales.
Textron has entered into an agreement w ith Agusta to share certain costs and profits for the joint design,
development, manufacture, marketing, sale, customer training and product support of Bell Helicopter’s
BA609 and Agusta’s AB139. These programs are currently in the development stage, and only certain
marketing costs are being charged to the venture. Bell Helicopter’s share of the development costs are
being charged to earnings as a period expense. Bell Helicopter has also partnered w ith the Boeing
Company in the development of the V-22 tiltrotor aircraft.
15. Joint Ventures
56 Textron Annual Report