Restructuring Activities

9 Months Ended

Sep. 27, 2020

Restructuring and Related Activities [Abstract]

Expenses associated with the Company's restructuring activities are included in Restructuring expense on the Consolidated statements of operations.

2020 Restructuring Activities – In 2020, the Company initiated restructuring activities including a workforce reduction, the termination of certain current and future products, facility changes, optimizing its global independent dealer network, exiting certain international markets, and discontinuing its sales and manufacturing operations in India. The workforce reduction will result in the elimination of approximately 700 positions globally, including the termination of approximately 500 employees. In addition, the India action will result in the termination of approximately 70 employees.

Restructuring expenses related to the 2020 restructuring activities, by segment, were as follows (in millions):


	Amount Incurred
	Three months ended September 27, 2020		Nine months ended September 27, 2020

Motorcycles and Related Products	$	43.6	$	84.6
Financial Services	0.3		1.3
	$	43.9	$	85.9

The Company expects restructuring expenses of approximately $169 million, primarily in 2020. This includes approximately $155 million and $14 million expected to be in incurred in the Motorcycles and Financial Services segments, respectively. Total expected restructuring expenses under the 2020 restructuring activities include approximately $34 million related to employee termination benefits, $103 million related to contract termination and other costs and $32 million related to non-current asset adjustments, including accelerated depreciation and other adjustments to the carrying value of non-current assets.

Changes in accrued restructuring expenses for the 2020 restructuring activities initiated in the second quarter of 2020, which are included in Accrued liabilities on the Consolidated balance sheets, were as follows (in thousands):


	Three months ended September 27, 2020								Nine months ended September 27, 2020
	Employee Termination Benefits		Contract Terminations & Other		Non-Current Asset Adjustments		Total		Employee Termination Benefits		Contract Terminations & Other		Non-Current Asset Adjustments		Total
Balance, beginning of period	$	25,298	$	14,270	$	—	$	39,568	$	—	$	—	$	—	$	—
Restructuring expense	4,493		23,422		16,000		43,915		29,814		37,692		18,358		85,864
Utilized – cash	(11,940)		(5,899)		—		(17,839)		(11,940)		(5,899)		—		(17,839)
Utilized – non cash	—		—		(16,000)		(16,000)		—		—		(18,358)		(18,358)
Foreign currency changes	166		(54)		—		112		143		(54)		—		89
Balance, end of period	$	18,017	$	31,739	$	—	$	49,756	$	18,017	$	31,739	$	—	$	49,756

2018 Restructuring Activities – In 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 December 31, 2019, the Motorcycles segment incurred cumulative restructuring expenses of $122.2 million and other costs related to temporary inefficiencies of $23.2 million under the Manufacturing Optimization Plan. The Manufacturing Optimization Plan was completed in 2019.

In 2018, the Company initiated a reorganization of its workforce (Reorganization Plan), which was completed in 2019. As a result, approximately 70 employees left the Company on an involuntary basis.

Changes in accrued restructuring expenses for the 2018 restructuring activities which are included in Accrued liabilities on the Consolidated balance sheets during 2019 were as follows (in thousands). The changes in accrued restructuring expenses for the 2018 restructuring activities during the three and nine months ended September 27, 2020 were immaterial.


	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

	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

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 and nine months ended September 29, 2019 of $2.5 million and $10.0 million, respectively.