XML 99 R12.htm IDEA: XBRL DOCUMENT v3.19.3
Restructuring Expenses
 9 Months Ended
Sep. 29, 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 of 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 September 29, 2019, the Motorcycles segment incurred $144.5 million of restructuring expenses and other consolidation costs under the Manufacturing Optimization Plan since its inception in 2018.
The Company's estimated range for cumulative restructuring expenses and other consolidation costs is $142 million to $152 million under the Manufacturing Optimization Plan through 2019, of which approximately 70% are expected to be cash charges. The 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 presented as a line item in the Consolidated statements of income and the accrued restructuring liability is recorded in Accrued liabilities on the Consolidated balance sheets. Changes in the accrued restructuring liability were as follows (in thousands):
 
Three months ended September 29, 2019
 
Manufacturing Optimization Plan
 
Reorganization Plan
 
 
 
Employee Termination Benefits
 
Accelerated Depreciation
 
Other
 
Total
 
Employee Termination Benefits
 
Total
Balance, beginning of period
$
9,661

 
$
—

 
$
23

 
$
9,684

 
$
144

 
$
9,828

Restructuring (benefit) expense
(1
)
 
719

 
6,850

 
7,568

 
61

 
7,629

Utilized - cash
(6,617
)
 
—

 
(6,535
)
 
(13,152
)
 
(205
)
 
(13,357
)
Utilized - non cash
(2
)
 
(719
)
 
(336
)
 
(1,057
)
 
—

 
(1,057
)
Foreign currency changes
(26
)
 
—

 
—

 
(26
)
 
—

 
(26
)
Balance, end of period
$
3,015

 
$
—

 
$
2

 
$
3,017

 
$
—

 
$
3,017

 
Three months ended September 30, 2018
 
Manufacturing Optimization Plan
 
Reorganization Plan
 
 
 
Employee Termination Benefits
 
Accelerated Depreciation
 
Other
 
Total
 
Employee Termination Benefits
 
Total
Balance, beginning of period
$
36,758

 
$
—

 
$
77

 
$
36,835

 
$
—

 
$
36,835

Restructuring (benefit) expense
(649
)
 
9,420

 
6,061

 
14,832

 
—

 
14,832

Utilized - cash
(5,402
)
 
—

 
(6,053
)
 
(11,455
)
 
—

 
(11,455
)
Utilized - non cash
—

 
(9,420
)
 
—

 
(9,420
)
 
—

 
(9,420
)
Foreign currency changes
(140
)
 
—

 
(2
)
 
(142
)
 
—

 
(142
)
Balance, end of period
$
30,567

 
$
—

 
$
83

 
$
30,650

 
$
—

 
$
30,650


 
Nine months ended September 29, 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 (benefit)
16

 
14,684

 
17,316

 
32,016

 
(334
)
 
31,682

Utilized - cash
(21,951
)
 
—

 
(16,357
)
 
(38,308
)
 
(3,101
)
 
(41,409
)
Utilized - non cash
(2
)
 
(14,684
)
 
(1,032
)
 
(15,718
)
 
—

 
(15,718
)
Foreign currency changes
(6
)
 
—

 
(4
)
 
(10
)
 
(26
)
 
(36
)
Balance, end of period
$
3,015

 
$
—

 
$
2

 
$
3,017

 
$
—

 
$
3,017


 
Nine months ended September 30, 2018
 
Manufacturing Optimization Plan
 
Reorganization Plan
 
 
 
Employee Termination Benefits
 
Accelerated Depreciation
 
Other
 
Total
 
Employee Termination Benefits
 
Total
Balance, beginning of period
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Restructuring expense
38,956

 
24,779

 
10,309

 
74,044

 
—

 
74,044

Utilized - cash
(7,835
)
 
—

 
(10,220
)
 
(18,055
)
 
—

 
(18,055
)
Utilized - non cash
—

 
(24,779
)
 
—

 
(24,779
)
 
—

 
(24,779
)
Foreign currency changes
(554
)
 
—

 
(6
)
 
(560
)
 
—

 
(560
)
Balance, end of period
$
30,567

 
$
—

 
$
83

 
$
30,650

 
$
—

 
$
30,650


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 September 29, 2019 and September 30, 2018 of $2.5 million and $6.2 million, respectively, and $10.0 million and $9.3 million, respectively, during the nine months ended September 29, 2019 and September 30, 2018.