E-Z-GO 2009 Annual Report Download - page 81

Notes to the Consolidated Financial Statements
72
Asset impairment charges include a $43 million charge recorded in the second quarter of 2009 to write off assets related to the Citation Columbus
development project. Due to the prevailing adverse market conditions and after analysis of the business jet market related to the product offering,
Cessna formally canceled the Citation Columbus development project in the second quarter of 2009. Cessna began this project in early 2008 for
the development of an all-new, wide-bodied, eight-passenger business jet designed for international travel that would extend Cessna’s product
offering as its largest business jet to date. This development project had capitalized costs related to tooling and a partially constructed
manufacturing facility, of which $43 million was considered not to be recoverable.
Since the inception of the restructuring program, we have incurred the following costs through January 2, 2010:
Curtailment Contract
Severance Charges, Asset Terminations Total
(In millions) Costs Net Impairments and Other Restructuring
Cessna $ 85 $ 26 $ 54 $ 7 $ 172
Finance 26 1 11 2 40
Corporate 40 — — 1 41
Industrial 22 (4) 9 3 30
Bell 9 — — — 9
Textron Systems 6 2 — 1 9
$ 188 $ 25 $ 74 $ 14 $ 301
An analysis of our restructuring reserve activity is summarized below:
Curtailment Contract
Severance Charges, Asset Terminations
(In millions) Costs Net Impairments and Other Total
Provision in 2008 $ 43 $ — $ 20 $ 1 $ 64
Non-cash settlement — — (20) — (20)
Cash paid (7) — — — (7)
Balance at January 3, 2009 $ 36 $ — $ — $ 1 $ 37
Provision in 2009 152 25 54 13 244
Reversals (7) — — — (7)
Non-cash settlement and loss recognition — (25) (54) — (79)
Cash paid (133) — — (11) (144)
Balance at January 2, 2010 $ 48 $ — $ — $ 3 $ 51
Severance costs generally are paid on a lump sum basis or on a monthly basis over the severance period granted to each employee and include
outplacement costs, which are paid in accordance with normal payment terms. Contract termination costs generally are paid upon exiting the
facility or over the remaining lease term.
The specific restructuring measures and associated estimated costs are based on our best judgment under prevailing circumstances. We believe
that the restructuring reserve balance of $51 million is adequate to cover the costs presently accruable relating to activities formally identified and
committed to under approved plans as of January 2, 2010 and anticipate that all actions related to these liabilities will be completed within a
12-month period. We estimate that we will incur approximately $30 million in additional pre-tax restructuring costs in 2010, most of which will
result in future cash outlays. The additional costs are expected to primarily include relocation costs at Cessna as it consolidates certain
operations, severance in the Cessna segment and $3 million in severance for the Finance segment. We expect that the program will be
substantially completed in 2010; however, we expect to incur additional costs to exit the non-captive portion of our commercial finance business
over the next two to three years, which are estimated to be within a range of $7 million to $17 million, primarily attributable to severance and
retention benefits.
Other Charges
In the fourth quarter of 2009, we recorded a goodwill impairment charge of $80 million for the Golf & Turfcare reporting unit, which is part of our
Industrial segment. See Note 10 for more information on this charge.
In the fourth quarter of 2008, we made a decision to exit the non-captive portion of the commercial finance business of our Finance segment,
which is being effected through a combination of orderly liquidation and selected sales and is expected, depending on market conditions, to be
substantially complete over the next two to three years. We recorded a pre-tax mark-to-market adjustment of $293 million against owned