E-Z-GO 2009 Annual Report Download - page 80

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Textron Inc.
Note 12. Special Charges
Special charges include restructuring charges of $237 million and $64 million in 2009 and 2008, respectively. In 2009, special charges also
includes a goodwill impairment charge of $80 million in the Industrial segment. In the fourth quarter of 2008, in connection with our decision to
sell the non-captive portion of our Finance business, we incurred an initial mark-to-market adjustment of $293 million that was made when we
classified certain finance receivables from held for investment to held for sale and a goodwill impairment charge in the Finance segment of
$169 million, which are both included in special charges. There were no special charges in 2007.
Special charges by segment are as follows:
Restructuring Program
Curtailment Contract Total
Severance Charges, Asset Terminations Total Other Special
(In millions) Costs Net Impairments and Other Restructuring Charges Charges
2009
Cessna $ 80 $ 26 $ 54 $ 7 $ 167 $ — $ 167
Finance 11 1 — 1 13 — 13
Corporate 34 — — 1 35 — 35
Industrial 6 (4) — 3 5 80 85
Bell 9 — — — 9 — 9
Textron Systems 5 2 — 1 8 — 8
$ 145 $ 25 $ 54 $ 13 $ 237 $ 80 $ 317
2008
Cessna $ 5 $ — $ — $ — $ 5 $ — $ 5
Finance 15 — 11 1 27 462 489
Corporate 6 — — — 6 — 6
Industrial 16 — 9 — 25 — 25
Textron Systems 1 — — — 1 — 1
$ 43 $ — $ 20 $ 1 $ 64 $ 462 $ 526
Restructuring Program
In the fourth quarter of 2008, we initiated a restructuring program to reduce overhead costs and improve productivity across the company, which
includes corporate and segment direct and indirect workforce reductions and streamlining of administrative overhead, and announced the exit of
portions of our commercial finance business. This program was expanded in 2009 to include additional workforce reductions, primarily at
Cessna, Corporate and Bell, the cancellation of the Citation Columbus development project, the streamlining and reorganization of senior
management and the consolidation of certain operations at Cessna. By the end of 2010, we expect to have eliminated approximately 10, 800
positions worldwide representing approximately 25% of our global workforce since the inception of the program. As of January 2, 2010, we have
terminated approximately 10,400 employees and have exited 23 leased and owned facilities and plants under this program.
We record restructuring costs in special charges as these costs are generally of a nonrecurring nature and are not included in segment profit,
which is our measure used for evaluating performance and for decision-making purposes. Severance costs related to an approved restructuring
program are classified as special charges unless the costs are for volume-related reductions of direct labor that are deemed to be of a temporary
or cyclical nature. Most of our severance benefits are provided for under existing severance programs, and the associated costs are accrued when
they are probable and estimable. Special one-time termination benefits are accounted for once an approved plan is communicated to employees
that establishes the terms of the benefit arrangement, the number of employees to be terminated, along with their job classification and location,
and the expected completion date.
We recorded net curtailment charges of $25 million for our pension and other postretirement benefit plans in the second quarter of 2009, as our
analysis of the impact of workforce reductions on these plans indicated that curtailments had occurred and the amounts could be reasonably
estimated. The curtailment charge for the pension plan is primarily due to the recognition of prior service costs that were previously being
amortized over a period of years.
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