Note 11. 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 connection with this plan, we recorded special charges of $15 million and $42 million in the third quarter and first nine months of 2017, respectively, and $115 million of special charges in both the third quarter and first nine months of 2016. Since the inception of the 2016 plan, we have incurred a total of $84 million of severance costs, $63 million of asset impairments and $18 million in contract terminations and other costs. Of these amounts, $67 million was incurred at Textron Systems, $63 million at Textron Aviation, $29 million at Industrial and $6 million at Bell and Corporate. 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 restructuring charges of $8 million and $27 million in the third quarter and first nine months of 2017, respectively. Under this plan, we have incurred a total of $19 million of severance costs, largely related to change-of-control provisions, and $8 million of contract termination and other costs. In addition, we recorded $2 million and $6 million of acquisition-related transaction and integration costs in the third quarter and first nine months of 2017, respectively.

We expect both the 2016 Plan and the Arctic Cat plan to be complete by the end of 2017 with approximately $10 million in aggregate special charges expected in the fourth quarter of 2017.

Special charges recorded for both plans are as follows:

(In millions)		Severance Costs		Asset Impairments		Contract Terminations and Other		Acquisition Integration/ Transaction Costs		Total Special Charges
For the three months ended September 30, 2017

Industrial	$	1	$	1	$	9	$	2	$	13
Textron Aviation		6		—		—		—		6
Textron Systems		1		3		2		—		6

	$	8	$	4	$	11	$	2	$	25

For the three months ended October 1, 2016

Industrial	$	11	$	2	$	—	$	—	$	13
Textron Aviation		34		1		—		—		35
Textron Systems		13		33		13		—		59
Bell		8		—		—		—		8

	$	66	$	36	$	13	$	—	$	115

For the nine months ended September 30, 2017

Industrial	$	20	$	1	$	15	$	6	$	42
Textron Aviation		11		17		—		—		28
Textron Systems		2		7		(4)		—		5

	$	33	$	25	$	11	$	6	$	75

For the nine months ended October 1, 2016

Industrial	$	11	$	2	$	—	$	—	$	13
Textron Aviation		34		1		—		—		35
Textron Systems		13		33		13		—		59
Bell		8		—		—		—		8

	$	66	$	36	$	13	$	—	$	115


An analysis of our restructuring reserve activity for both plans in the first nine months 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		8		27
Provision for 2016 plan						15		11		26
Reversals*						(1)		(8)		(9)
Cash paid						(64)		(11)		(75)


Balance at September 30, 2017					$	19	$	13	$	32

*Primarily related to favorable contract negotiations in the Textron Systems segment.

We expect cash payments for both restructuring plans to be approximately $30 million in the fourth quarter 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.