Special Charges

9 Months Ended

Oct. 02, 2021

Special charges recorded in the third quarter and first nine months of 2021 and 2020 by segment and type of cost are presented in the table below.


(In millions)	Severance Costs		Contract Termination and Other		Asset Impairments		Total 2020 COVID-19 Restructuring Plan		Other Asset Impairments		Total
Three months ended October 2, 2021
Industrial	$	3	$	1	$	6	$	10	$	—	$	10
Total special charges	$	3	$	1	$	6	$	10	$	—	$	10
Three months ended October 3, 2020


Industrial	$	3	$	—	$	2	$	5	$	—	$	5
Corporate	2		—		—		2		—		2
Total special charges	$	5	$	—	$	2	$	7	$	—	$	7
Nine months ended October 2, 2021
Industrial	$	3	$	6	$	11	$	20	$	—	$	20
Total special charges	$	3	$	6	$	11	$	20	$	—	$	20
Nine months ended October 3, 2020
Textron Aviation	$	27	$	—	$	1	$	28	$	32	$	60
Textron Systems	14		12		14		40		—		40
Industrial	11		—		2		13		7		20
Corporate	4		—		—		4		—		4
Total special charges	$	56	$	12	$	17	$	85	$	39	$	124

2020 COVID-19 Restructuring Plan

In the second quarter of 2020, we initiated a restructuring plan to reduce operating expenses through headcount reductions, facility consolidations and other actions in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic. This plan was expanded in the third quarter of 2020 to include additional headcount reductions and facility consolidations. Since inception of the plan, we have incurred total charges of $128 million, which included severance costs of $76 million for the termination of approximately 2,800 employees, asset impairment charges of $33 million and contract terminations and other costs of $19 million. Of these amounts, $54 million was incurred at Industrial, $37 million at Textron Systems, $33 million at Textron Aviation, and $4 million at Corporate. We expect to incur additional contract termination costs and other charges in the range of $5 million to $10 million, primarily in the Industrial segment, and expect the plan to be substantially completed in the fourth quarter of 2021.

In the second quarter of 2020 and in connection with the restructuring plan, we ceased manufacturing at TRU Simulation + Training Canada Inc.’s facility in Montreal, Canada, resulting in a production suspension of our commercial air transport simulators. As a result of this action and market conditions, we incurred an inventory charge of $55 million, which was recorded in Cost of Sales, to write-down the related inventory to its net realizable value.

Other Asset Impairments

In the first quarter of 2020, we recognized $39 million of intangible asset impairment charges at the Textron Aviation and Industrial segments. Due to the impact of the COVID-19 pandemic, we experienced decreased demand for our products and services as our customers delayed or ceased orders due to the environment of economic uncertainty. In light of these conditions, Textron Aviation had temporarily shut down most aircraft production, including the King Air turboprop and Beechcraft piston product lines, and had instituted employee furloughs. Based on these events, we performed an interim impairment test of the indefinite-lived Beechcraft and King Air trade name intangible assets and recorded an impairment charge of $32 million.

Restructuring Reserve

Our restructuring reserve activity is summarized below:


(In millions)	Severance Costs		Contract Terminations and Other		Total
Balance at January 2, 2021	$	43	$	9	$	52
Provision for 2020 COVID-19 restructuring plan	8		7		15
Cash paid	(21)		(7)		(28)
Reversals	(5)		(1)		(6)
Foreign currency translation	(1)		—		(1)
Balance at October 2, 2021	$	24	$	8	$	32

The majority of the remaining cash outlays of $32 million is expected to be paid by the first quarter of 2022. Severance costs generally are paid on a lump-sum basis and include outplacement costs, which are paid in accordance with normal payment terms.