E-Z-GO 2010 Annual Report Download - page 80

68
Restructuring Program
In the fourth quarter of 2008, we initiated a restructuring program to reduce overhead costs and improve productivity across the
company and announced the exit of portions of our commercial finance business. This restructuring program primarily included
corporate and segment direct and indirect workforce reductions and the closure and consolidation of certain operations. In the fourth
quarter of 2010, we initiated the final series of restructuring actions under this program, which included workforce reductions in the
Bell, Systems and Industrial segments and at Corporate, along with the decision to exit a plant in the Industrial segment. With the
completion of this program at the end of 2010, we have terminated approximately 12,100 positions worldwide representing
approximately 28% of our global workforce since the inception of the program and have exited 30 leased and owned facilities and
plants.
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 and the
number of employees to be terminated, along with their job classification and location and the expected completion date.
Since the inception of the restructuring program in the fourth quarter of 2008, we have incurred the following costs through the end of
2010:
(In millions)
Severance
Costs
Curtailment
Charges, Net
Asset
Impairments
Contract
Terminations
Total
Restructuring
Cessna
$ 119
$ 26
$ 60
$ 10
$ 215
Finance
33
1
12
5
51
Corporate
41
—
—
1
42
Industrial
27
(4)
18
4
45
Bell
19
—
—
—
19
Textron Systems
25
2
—
1
28
$ 264
$ 25
$ 90
$ 21
$ 400
An analysis of our restructuring reserve activity is summarized below:
(In millions)
Severance
Costs
Curtailment
Charges, Net
Asset
Impairment
Contract
Terminations
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
Provision in 2010
79
—
16
7
102
Reversals
(3)
—
—
—
(3)
Non-cash settlement
—
—
(16)
—
(16)
Cash paid
(67)
—
—
(5)
(72)
Balance at January 1, 2011
$ 57
$ —
$ —
$ 5
$ 62
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. Most of these costs are expected to be paid
over the next 12 months. Contract termination costs generally are paid upon exiting the facility or over the remaining lease term.
Other Charges
In the third quarter of 2010, we substantially liquidated the assets held by a Canadian entity within the Finance segment. Accordingly,
we recorded a non-cash charge of $91 million ($74 million after-tax) within special charges to reclassify the entity’s cumulative
currency translation adjustment amount within other comprehensive income to the Statement of Operations. The reclassification of
this amount had no impact on shareholders’ equity.