XML 23 R11.htm IDEA: XBRL DOCUMENT v3.19.2
Restructuring Expenses
 6 Months Ended
Jun. 30, 2019
Restructuring and Related Activities [Abstract]  
Restructuring Expenses Restructuring Expenses
In January 2018, the Company initiated a plan to further improve its manufacturing operations and cost structure by commencing a multi-year manufacturing optimization plan which included the consolidation of its motorcycle assembly plant in Kansas City, Missouri, into its plant in York, Pennsylvania, and the closure of its wheel operations in Adelaide, Australia (Manufacturing Optimization Plan). The consolidation of operations included the elimination approximately 800 jobs at the Kansas City facility and the addition of approximately 450 jobs at the York facility through 2019. The Adelaide facility closure included the elimination of approximately 90 jobs.
Through June 30, 2019, the Motorcycles segment incurred $134.4 million of restructuring expenses and other consolidation costs for the Manufacturing Optimization Plan since its inception in 2018. The Company expects total restructuring expenses and other consolidation costs of $142 million to $152 million related to the Manufacturing Optimization Plan through 2019, of which approximately 70% will be cash charges.
The current estimate includes $119 million to $124 million of restructuring expense and $23 million to $28 million of costs related to temporary inefficiencies. The Company expects restructuring expenses to include the cost of employee termination benefits, accelerated depreciation, and other project implementation costs of $38 million to $40 million, $48 million to $49 million, and $33 million to $35 million, respectively.
In November 2018, the Company implemented a reorganization of its workforce (Reorganization Plan). As a result, approximately 70 employees left the Company on an involuntary basis.
Restructuring expense related to these plans is recorded in a separate line item in the consolidated statements of income and the accrued restructuring liability is recorded in Accrued liabilities on the consolidated balance sheet. Changes in the accrued restructuring liability (in thousands) were as follows:
 
Three months ended June 30, 2019
 
Manufacturing Optimization Plan
 
Reorganization Plan
 
 
 
Employee Termination Benefits
 
Accelerated Depreciation
 
Other
 
Total
 
Employee Termination Benefits
 
Total
Balance, beginning of period
$
22,401

 
$
—

 
$
187

 
$
22,588

 
$
1,051

 
$
23,639

Restructuring expense (benefit)
8

 
5,586

 
4,830

 
10,424

 
(1
)
 
10,423

Utilized - cash
(12,734
)
 
—

 
(4,294
)
 
(17,028
)
 
(882
)
 
(17,910
)
Utilized - non cash
—

 
(5,586
)
 
(696
)
 
(6,282
)
 
—

 
(6,282
)
Foreign currency changes
(14
)
 
—

 
(4
)
 
(18
)
 
(24
)
 
(42
)
Balance, end of period
$
9,661

 
$
—

 
$
23

 
$
9,684

 
$
144

 
$
9,828

 
Three months ended July 1, 2018
 
Manufacturing Optimization Plan
 
Reorganization Plan
 
 
 
Employee Termination Benefits
 
Accelerated Depreciation
 
Other
 
Total
 
Employee Termination Benefits
 
Total
Balance, beginning of period
$
38,287

 
$
—

 
$
63

 
$
38,350

 
$
—

 
$
38,350

Restructuring expense
(1,186
)
 
9,746

 
3,810

 
12,370

 
—

 
12,370

Utilized - cash
(133
)
 
—

 
(3,793
)
 
(3,926
)
 
—

 
(3,926
)
Utilized - non cash
—

 
(9,746
)
 
—

 
(9,746
)
 
—

 
(9,746
)
Foreign currency changes
(210
)
 
—

 
(3
)
 
(213
)
 
—

 
(213
)
Balance, end of period
$
36,758

 
$
—

 
$
77

 
$
36,835

 
$
—

 
$
36,835


 
Six months ended June 30, 2019
 
Manufacturing Optimization Plan
 
Reorganization Plan
 
 
 
Employee Termination Benefits
 
Accelerated Depreciation
 
Other
 
Total
 
Employee Termination Benefits
 
Total
Balance, beginning of period
$
24,958

 
$
—

 
$
79

 
$
25,037

 
$
3,461

 
$
28,498

Restructuring expense
17

 
13,965

 
10,466

 
24,448

 
(395
)
 
24,053

Utilized - cash
(15,334
)
 
—

 
(9,822
)
 
(25,156
)
 
(2,896
)
 
(28,052
)
Utilized - non cash
—

 
(13,965
)
 
(696
)
 
(14,661
)
 
—

 
(14,661
)
Foreign currency changes
20

 
—

 
(4
)
 
16

 
(26
)
 
(10
)
Balance, end of period
$
9,661

 
$
—

 
$
23

 
$
9,684

 
$
144

 
$
9,828

 
Six months ended July 1, 2018
 
Manufacturing Optimization Plan
 
Reorganization Plan
 
 
 
Employee Termination Benefits
 
Accelerated Depreciation
 
Other
 
Total
 
Employee Termination Benefits
 
Total
Balance, beginning of period
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Restructuring expense
39,605

 
15,359

 
4,248

 
59,212

 
—

 
59,212

Utilized - cash
(2,433
)
 
—

 
(4,167
)
 
(6,600
)
 
—

 
(6,600
)
Utilized - non cash
—

 
(15,359
)
 
—

 
(15,359
)
 
—

 
(15,359
)
Foreign currency changes
(414
)
 
—

 
(4
)
 
(418
)
 
—

 
(418
)
Balance, end of period
$
36,758

 
$
—

 
$
77

 
$
36,835

 
$
—

 
$
36,835


The Company incurred incremental Motorcycles and Related Products cost of goods sold due to temporary inefficiencies resulting from implementing the Manufacturing Optimization Plan during the three months ended June 30, 2019 and July 1, 2018 of $4.0 million and $2.4 million, respectively, and $7.6 million and $3.1 million, respectively, during the six months ended June 30, 2019 and July 1, 2018.
During the three months ended July 1, 2018, the restructuring liability was adjusted to reflect updated assumptions resulting in a reversal of approximately $1.7 million of previously recognized restructuring expense.