E-Z-GO 2002 Annual Report Download - page 64

Restructuring
To improve returns at core businesses and to complete the integration of certain acquisitions, Textron
approved and committed to a restructuring program in the fourth quarter of 2000 based upon targeted
cost reductions which was expanded in 2001. In October 2002, Textron announced a further expansion
of its restructuring program as part of its strategic effort to improve operating efficiencies, primarily in its
industrial business. Textron’s restructuring program includes corporate and segment workforce reduc-
tions, consolidation of facilities primarily in the United States and Europe, rationalization of certain prod-
uct lines, outsourcing of non-core production activity, the divestiture of non-core businesses and stream-
lining of sales and administrative overhead.
Under this restructuring program, Textron has reduced its workforce by approximately 8,100 employees
and has closed 81 facilities, including 36 manufacturing plants, primarily in the Industrial Products,
Industrial Components and Fastening Systems segments.
Restructuring costs that have been accrued in accordance with EITF Issue No. 94-3, “Liability Recogni-
tion for Certain Employee Termination Benefits and Other Costs to Exit an Activity,” and related asset
impairment charges are included in special charges on the consolidated statement of operations. An
analysis of the special charges for restructuring and related reserve accounts is summarized below:
Asset Facilities
(In millions) Impairments Severance & Other Total
Charges $ 1 $ 15 $ 1 $ 17
Cash paid — (1) — (1)
Non-cash utilization (1) — — (1)
Balance at December 30, 2000 — 14 1 15
Additions 28 79 4 111
Reserves deemed unnecessary — (2) — (2)
Non-cash utilization (28) (4) — (32)
Cash paid — (56) (2) (58)
Balance at December 29, 2001 — 31 3 34
Additions 27 65 6 98
Reserves deemed unnecessary — (7) (1) (8)
Non-cash utilization (27) — — (27)
Cash paid — (65) (4) (69)
Balance at December 28, 2002 $ — $ 24 $ 4 $ 28
Severance costs are generally paid on a monthly basis over the severance period granted to each
employee or on a lump sum basis when required. Severance costs include outplacement costs which
are paid in accordance with normal payment terms. Facilities and other costs represent lease termina-
tion costs and facility and plant clean-up costs. Lease termination costs are generally paid upon exiting
the facility or over the remaining lease term and facility and plant clean-up costs are paid in accordance
with normal payment terms.
The specific restructuring measures and associated estimated costs are based on Textron’s best judg-
ment under prevailing circumstances. Textron believes that the restructuring reserve balance of $28 mil-
lion is adequate to carry out the restructuring activities formally identified and committed to as of
December 28, 2002 and anticipates that all actions related to these liabilities will be completed within a
twelve-month period.
Textron also incurred costs related to restructuring that have not been included in special charges and
are included in segment profit only as incurred. While these costs are incremental and directly related to
the restructuring program, they are expensed as incurred as they do not meet EITF Issue No. 94-3 crite-
ria for accrual.
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