Textron (TXT) to Implement Headcount Reductions, Restructuring

August 30, 2016 4:05 PM EDT
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Textron (NYSE: TXT) disclosed the following on Tuesday:

Item 2.06 Material Impairments.

On August 30, 2016, our Board of Directors approved a plan to restructure and realign our businesses by implementing headcount reductions, facility consolidations and other actions in order to improve overall operating efficiency across Textron. The restructuring plan principally impacts the Textron Systems and Industrial segments. The plan provides for Textron Systems to discontinue production of its sensor-fuzed weapon product, in light of reduced orders, which will generate headcount reductions, facility consolidations and asset impairments within its Weapons and Sensors operating unit and also includes additional headcount reductions and asset impairments in the Textron Systems segment. Historically, sensor-fuzed weapon sales have relied on foreign military and direct commercial international customers for which both executive branch and congressional approval is required. The current political environment has made it difficult to obtain these approvals. Within our Industrial segment, the plan provides for the combination of our Jacobsen business with the Textron Specialized Vehicles businesses, resulting in the consolidation of certain facilities and general and administrative functions and related headcount reductions. We anticipate the overall plan to be substantially completed by March 2017.

We expect total pre-tax charges in the range of $110 million to $140 million to be incurred under this plan, primarily in the third quarter of 2016. Severance and related costs are estimated to be in the range of $40 million to $55 million. Contract termination and other facility closure charges are estimated to be in the range of $25 million to $30 million, and asset impairment charges are estimated to be in the range of $45 million to $55 million. Expected cash outlays in connection with this plan are estimated to be in the range of $65 million to $85 million, incurred principally in 2016.

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