E-Z-GO 1998 Annual Report Download - page 6

We have started to redeploy the $2.9 billion in after-tax proceeds by allocat-
ing 40% to share buyback and 60% to acquisitions. Between the announcement
of the deal in August and year-end, we repurchased 10.2 million shares — the
balance to be completed by mid-1999 — and spent $570 million on acquisi-
tions. At our present pace, we expect full redeployment of this capital by 2000.
Our disciplined approach to acquisitions has served us well over the past
five years, and our rigorous criteria will be our guidepost as we intensify
activity in 1999. We will maintain a keen focus on making strategic, “bolt-on”
acquisitions that complement our existing businesses and meet our well-
defined financial requirements.
It is important to note that by repurchasing shares prior to the actual
closing of the transaction, our debt-to-capital ratio and return on equity
were temporarily inflated. Return on invested capital, which is not affected
by leverage, is a more consistent measure and will therefore become our
primary benchmark for how effectively we invest capital and create value
for our shareholders.
Market-leading Businesses Fuel Growth
Our established goal of 8-11 percent top-line growth continues to be one of
the key drivers of our performance. In 1998, revenues increased 12 percent,
supported equally by strategic acquisitions and internal growth — a balance
we plan to maintain going forward.
Last year, our company spent $1.1 billion on nine acquisitions. We expect
to sustain this level of acquisition activity through 2001, complemented by
aggressive internal growth focused on developing innovative products and
technologies, and penetrating new markets.
Our Aircraft segment delivered a 5 percent increase in revenue and
8 percent improvement in operating profit, reflecting the continued strength
of Cessna Aircraft. The introduction of four new aircraft highlights the power
of Cessna’s internal growth strategy, a cornerstone to this segment’s future
success. Bell Helicopter continues to invest in the development of break-
through tiltrotor technology, which promises to be a key growth driver early
in the next century. Thanks to its impressive array of new products and tech-
nologies, the Aircraft segment now enjoys an unprecedented backlog of $5.9
billion – an indicator of the tremendous future that lies ahead.
Automotive posted a strong year, with revenue increasing 13 percent and
operating profit up 19 percent, led by Kautex’s outstanding growth and
improving margins in our trim business. Looking ahead, our focus remains
Acquisition Criteria
Textron applies rigorous
financial and strategic
standards when evaluating
acquisitions. Our philosophy
is to “buy good businesses
and make them better.”
Key Criteria:
P Strategically “fit” with
other Textron businesses
P Offer clear, long-term
growth prospects while
strengthening Textron’s
market leadership
positions
P Contribute to EPS
immediately, or have
significant earnings
growth potential
P Achieve economic profit
within three years
P Have the potential to
reach or exceed
15% ROIC
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