E-Z-GO 1999 Annual Report Download - page 31

Management’s Discussion and Analysis
Textron Inc.
1999 vs. 1998
◗Diluted earnings per share from continuing operations for 1999 were $4.05 per share,
up 51% from the 1998 amount of $2.68. Income from continuing operations in 1999
of $623 million was up 41% from $443 million in 1998. Revenues increased 20% to
$11.6 billion in 1999 from $9.7 billion in 1998.
◗In August 1998, Textron announced that it had reached an agreement to sell Avco
Financial Services (AFS) to Associates First Capital Corporation for $3.9 billion in
cash. The sale of AFS was completed on January 6, 1999 and a gain of $1.62 billion
on the sale of AFS was recorded in the first quarter 1999. Textron also recorded an
extraordinary loss of $43 million (net of tax) on the early retirement of debt in the
first quarter 1999. Textron increased the gain on the sale of AFS to $1.65 billion in the
fourth quarter 1999, as a result of finalizing all activities associated with the sale. Net
income, including the gain and extraordinary loss, was $2.23 billion vs. $608 million
in 1998, which included $165 million from AFS, a discontinued operation.
◗Operating income of Textron’s four business segments aggregated $1.201 billion in
1999, up 15% from 1998, as a result of continued improved financial results across all
business segments, reflecting the benefit of organic growth and acquisitions.
◗Total segment margins decreased to 10.4% in 1999 from 10.7% in 1998, due primarily
to lower Aircraft margins and the impact of lower margin acquisitions.
◗Interest income and expense – the net interest expense for Textron Manufacturing
decreased $117 million as a result of the proceeds received in January 1999 from the
divestiture of AFS. Interest income increased $27 million, as a result of Textron’s net
investment position during the year, while interest expense decreased $90 million
due to a lower level of average debt, resulting from the pay down of debt with the
AFS proceeds, partially offset by incremental debt associated with acquisitions and
share repurchases.
1998 vs. 1997
◗Diluted earnings per share from continuing operations for 1998 were $2.68 per share,
up 22% from the 1997 amount of $2.19. Income from continuing operations in 1998
of $443 million was up 19% from $372 million in 1997. Revenues increased 12% to
$9.7 billion in 1998 from $8.7 billion in 1997. Net income including the results of
AFS which is a discontinued operation was $608 million vs. $558 million in 1997.
◗Operating income of Textron’s four business segments aggregated $1.040 billion in
1998, up 13% from 1997, as a result of continued improved financial results across all
business segments.
◗Total segment margins increased to 10.7% in 1998 from 10.6% in 1997.
◗Corporate expenses and other – net decreased $11 million due primarily to 1997 costs
associated with the termination of interest rate swap agreements no longer qualifying
as accounting hedges and 1997 litigation expenses related to a divested operation.
◗Interest income and expense – the net interest expense for Textron manufacturing
increased $29 million due to higher average debt resulting from the incremental debt
associated with acquisitions and share repurchases, partially offset by the payment of
debt with proceeds in 1997 from the divestiture of Paul Revere.
Results of
Operations
1999 Textron Annual Report 29
$4.05
$2.68
$2.19
999897
51%22%23%
Earnings
per Share*
* Income from continuing
operations - diluted
$11,579
Revenues
$9,683
$8,683
999897
20%12%16%