E-Z-GO 2002 Annual Report Download - page 28

As of December 28, 2002, Textron has reduced its workforce by approximately 8,100 employees,
including approximately 2,500 in Industrial Products, 2,000 in Fastening Systems, 2,000 in Industrial
Components, 1,400 in Aircraft and 200 in Finance and Corporate. Additionally, 81 facilities, including 36
manufacturing plants with 3.1 million square feet of floor space, have been closed primarily in the Indus-
trial Products, Industrial Components and Fastening Systems segments.
Total program costs, including costs related to restructuring, are estimated at $486 million and include
$11 million related to Trim. As of December 28, 2002, $272 million has been incurred including $11 mil-
lion related to Trim. Restructuring savings were $253 million in 2002 and are expected to be at least
$325 million in 2003 and $400 million in 2004.
Other costs related to restructuring, but not accruable under EITF No. 94-3, of $22 million in 2002 and
$34 million in 2001 were included in segment profit as incurred. For 2002, costs related to restructuring
totaled $8 million in Industrial Products, $6 million in Industrial Components, and $4 million each for Air-
craft and Fastening Systems. For 2001, costs related to restructuring totaled $10 million for Aircraft and
$8 million each for Fastening Systems, Industrial Products and Industrial Components.
For projects initiated prior to December 28, 2002, the special charges (restructuring costs accruable
under EITF No. 94-3) were recorded as each project was formally identified and committed to action.
The other costs related to restructuring were recorded in segment profit as incurred. Projects initiated
after December 28, 2002, will be accounted for in accordance with SFAS No. 146, “Accounting for Costs
Associated with Exit or Disposal Activities”, which delays the recording of costs until they are incurred,
with an exception for one-time termination benefits and lease termination costs. Accordingly, all costs
related to restructuring will be included in special charges beginning in 2003.
Goodwill, Intangibles and Investment Impairment Special Charges
In the fourth quarter of 2002, Textron recorded a write-down of $38 million ($23 million after-tax) of its
holdings in C&A common stock in special charges. Textron acquired this stock as a result of the disposi-
tion of the Trim business. During the second half of 2002, the C&A common stock experienced a decline
in market value. In December 2002, Moody’s lowered its liquidity rating of C&A. Due to this indicator and
the extended length of time and extent to which the market value of the stock was less than the carrying
value, Textron determined that the decline in the market value of the stock was other than temporary and
wrote down its investment in the stock.
At the end of 2000, the value of Textron’s e-business investment portfolio had fallen substantially. Textron
determined that this decline in value was other than temporary and recorded a pre-tax charge of $117
million to write-down the portfolio to the current fair value. In 2001, Textron recorded an additional $6 mil-
lion impairment charge, and subsequently realized a $3 million net loss on the sale of its remaining
e-business securities. Textron had no remaining investments in e-business securities as of December
28, 2002.
During the third quarter of 2001, certain long-lived asset impairment indicators were identified for
OmniQuip which caused Textron to perform an impairment review. Key impairment indicators included
OmniQuip’s operating performance against plan despite restructuring efforts to improve operating effi-
ciencies and streamline operations. Additionally, the strategic review process completed in August 2001
confirmed that the economic and market conditions combined with the saturation of light construction
equipment handlers in the market had negatively impacted the projected results for the foreseeable
future. The impairment calculation resulted in an impairment charge of $317 million, including goodwill
of $306 million and other intangible assets of $11 million.
In conjunction with the initiation of the 2000 restructuring program and Textron’s fourth quarter multi-year
financial planning process, management identified certain indicators of potential impairment of long-
lived assets. As a result, Textron performed an impairment review which identified impaired goodwill of
$205 million in Industrial Components, $128 million in Fastening Systems and $16 million in Industrial
Products, resulting in an aggregate write-down of $349 million. The largest portions of the goodwill
charge were at TECT ($178 million) and Flexalloy ($96 million).
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