E-Z-GO 1999 Annual Report Download - page 59

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Major actuarial assumptions used in accounting for defined benefit pension plans are
presented below.
January 1, January 2, January 3, December 28,
2000,1999,1998,1996,
Weighted average assumptions at year-end
Discount rate 7.50% 6.75% 7.25% 7.50%
Expected return on plan assets 9.25 9.25 9.00 9.00
Rate of compensation increase 4.80 4.80 5.00 5.00
Postretirement benefit plan discount rates are the same as those used by Textron’s
defined benefit pension plans.
The 1999 health care cost trend rate, which is the weighted average annual assumed rate
of increase in the per capita cost of covered benefits, was 8.0% for retirees age 65 and over
and 7.0% for retirees under age 65. Both rates are assumed to decrease gradually to 5.5% by
2001 and 2003, respectively, and then remain at that level. A one-percentage-point change
in assumed health care cost trend rates would have the following effects:
(In millions) 1% Increase 1% Decrease
Effect on total of service and interest cost components $ 5 $ (5)
Effect on postretirement benefit obligation 58 (52)
15.Textron files a consolidated federal income tax return for all U.S. subsidiaries and sepa-
rate returns for foreign subsidiaries. Textron recognizes deferred income taxes for temporary
differences between the financial reporting basis and income tax basis of assets and liabilities
based on enacted tax rates expected to be in effect when amounts are likely to be realized or
settled.
The following table shows income from continuing operations before income taxes
and distributions on preferred securities of subsidiary trust:
(In millions) 1999 1998 1997
United States $ 831 $582 $441
Foreign 199 181 207
Total $1,030 $763 $648
Income tax expense is summarized as follows:
(In millions) 1999 1998 1997
Federal:
Current $222 $225 $ 82
Deferred 54 (25) 71
State 36 33 27
Foreign 69 61 70
Income tax expense $381 $294 $250
The following reconciles the federal statutory income tax rate to the effective income
tax rate reflected in the consolidated statement of income:
1999 1998 1997
Federal statutory income tax rate 35.0% 35.0% 35.0%
Increase (decrease) in taxes resulting from:
State income taxes 2.3 2.7 2.8
Goodwill 2.2 4.3 2.7
Other – net (2.5) (3.5) (1.9)
Effective income tax rate 37.0% 38.5% 38.6 %
Textron’s net deferred tax asset consisted of gross deferred tax assets and gross deferred
tax liabilities of $1,966 million and $1,810 million, respectively, at the end of 1999 and
$1,775 million and $1,576 million, respectively, at the end of 1998.
Income Taxes
1999 Textron Annual Report 57