E-Z-GO 2003 Annual Report Download - page 65

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63
As of January 3, 2004, $389 million of cost has been incurred relating to continuing operations (includ-
ing $11 million related to Trim), with $154 million in the Industrial segment, $147 million in the Fastening
Systems segment, $38 million in the Cessna segment, $30 million in the Bell segment, $9 million in the
Finance segment and $11 million at Corporate. Costs incurred through January 3, 2004 include $209
million in severance costs, $94 million in asset impairment charges, $10 million in contract termination
costs and $76 million in other associated costs.
Textron estimates that approximately $127 million in additional program costs will be incurred primarily
in the Fastening Systems and Industrial segments. In total, Textron estimates that the entire program for
continuing operations will be approximately $516 million (including $11 million related to Trim) and will
be substantially complete by 2004. This estimate includes amounts for projects that have not been for-
mally approved and initiated as of January 3, 2004. For projects that have been formally approved and
initiated as of January 3, 2004, Textron expects to incur approximately $42 million in additional sever-
ance costs, $15 million in other associated costs and $4 million in contract termination costs. In addition,
management anticipates that certain long-lived assets may become impaired as plans are formalized
and approved for specific restructuring projects. Once a plan is approved, the long-lived assets affect-
ed by the plan are evaluated to determine if the held for sale criteria established by SFAS No. 144,
“Accounting for the Impairment and Disposal of Long-Lived Assets,” have been met. If all the criteria
have been met, the assets are measured at the lower of the carrying amount or fair value less costs to
sell. If the criteria have not been met, the estimated remaining undiscounted cash flows for the assets
are compared with the carrying amount and, if less, an impairment charge is taken based on the excess
of the carrying amount over the respective fair value at that time.
Textron adopted SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities,” as of
the beginning of fiscal 2003 for projects initiated after December 28, 2002. Previously, certain costs
related to restructuring that were not accruable under the prior standard were recorded in segment prof-
it as incurred. With the adoption of this Statement, all restructuring and related costs for which this State-
ment applies have been aggregated and recorded in special charges. Prior period amounts have been
reclassified to conform to this presentation.
An analysis of the restructuring program and related reserve account is summarized below:
(In millions)
Balance at December 30, 2000 $ 14 $ 1 $ — $ — $ 15
Additions 70 4 32 28 134
Reserves deemed unnecessary (2) — — — (2)
Non-cash utilization (4) — — (28) (32)
Cash paid (50) (2) (32) — (84)
Balance at December 29, 2001 $ 28 $ 3 $ — $ — $ 31
Additions 61 5 22 16 104
Reserves deemed unnecessary (6) (1) — — (7)
Non-cash utilization — — — (16) (16)
Cash paid (61) (4) (22) — (87)
Balance at December 28, 2002 $ 22 $ 3 $ — $ — $ 25
Additions $ 72 $ 2 $ 22 $ 49 $ 145
Reserves deemed unnecessary (1) — — — (1)
Non-cash utilization — — — (49) (49)
Cash paid (61) (2) (22) — (85)
Balance at January 3, 2004 $ 32 $ 3 $ — $ — $ 35
its industrial businesses. Textron’s restructuring program includes corporate and segment direct and
indirect workforce reductions, consolidation of facilities primarily in the United States and Europe, ration-
alization of certain product lines, outsourcing of non-core production activity, the divestiture of non-core
businesses, and streamlining of sales and administrative overhead. Under this restructuring program,
Textron has reduced its workforce by approximately 9,400 employees and has closed 88 facilities,
including 40 manufacturing plants, primarily in the Industrial and Fastening Systems segments. Textron
expects a total reduction of about 10,000 employees, excluding approximately 700 Trim employees and
1,000 OmniQuip employees, representing approximately 18% of its global workforce since the restruc-
turing was first announced.