Note 12. Special Charges

In the third quarter of 2016, we initiated 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. In the first quarter of 2017, we recorded special charges of $15 million related to this plan. Since the inception of this plan, we have incurred a total of $71 million of severance costs, $48 million of asset impairments and $19 million in contract terminations and other costs. Of these amounts, $63 million was incurred at Textron Systems, $46 million at Textron Aviation, $23 million at Industrial, and $6 million at Bell and Corporate. We expect to incur additional pre-tax charges under this plan in the range of $17 million to $32 million, primarily related to contract termination, severance, facility consolidation and relocation costs, which will principally be in the Industrial, Textron Aviation and Textron Systems segments. We anticipate that these restructuring activities will be substantially completed by the end of the second quarter of 2017. Upon completion, the total headcount reduction under this plan is expected to be approximately 2,000 positions, representing approximately 5% of our workforce.

In connection with the acquisition of Arctic Cat, as discussed in Note 2, we initiated a restructuring plan in the first quarter of 2017 to integrate this business into our Textron Specialized Vehicles business within the Industrial segment to reduce operating redundancies and maximize efficiencies. As a result of this plan, we recorded $19 million of severance costs in the first quarter of 2017, largely related to change-of-control provisions, and we expect to incur an additional $8 million of restructuring costs. In addition, we recorded $3 million of acquisition transaction costs in the first quarter of 2017 that are included in special charges. We estimate that we will incur total special charges of approximately $30 million related to Arctic Cat.

Special charges recorded in the first quarter of 2017 for both of these plans are as follows:

(In millions)		Severance Costs		Asset Impairments		Contract Terminations and Other		Acquisition Transaction Costs		Total Special Charges
Industrial	$	19	$	—	$	3	$	3	$	25
Textron Aviation		1		10		—		—		11
Textron Systems		—		—		1		—		1

	$	20	$	10	$	4	$	3	$	37

An analysis of our restructuring reserve activity for both plans in the first quarter of 2017 is summarized below:

(In millions)		Severance Costs		Contract Terminations and Other		Total
Balance at December 31, 2016	$	50	$	13	$	63
Provision for Arctic Cat plan		19		—		19
Provision for 2016 plan		1		4		5
Cash paid		(33)		(3)		(36)

Balance at April 1, 2017	$	37	$	14	$	51

The total expected cash outlay for both restructuring plans is estimated in the range of $135 million to $150 million, of which $58 million has been paid through the first quarter of 2017 and the remainder is expected to be paid by the end of 2017. Severance costs generally are paid on a lump-sum basis and include outplacement costs, which are paid in accordance with normal payment terms.