E-Z-GO 2000 Annual Report Download - page 23

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Textron Inc.
2000 vs.1999
Income from continuing operations for 2000 was $277 million, down from the 1999 amount of
$623 million. Diluted earnings per share from continuing operations were $1.90 and $4.05 for 2000
and 1999, respectively. Textron recognized special charges of $483 million in 2000 or $2.75 per
share after income taxes. Revenues increased 10% to $13.1 billion in 2000 from $11.9 billion in 1999.
Special charges of $483 million (pre-tax) in 2000 include accruable restructuring charges of $16
million, associated with the modernization and consolidation of manufacturing facilities in the
Automotive and Industrial Products segments, $350 million for goodwill and fixed asset impair-
ment and $117 million for the write-down of the Company’s e-business investment portfolio. The
discussion that follows refers to results before special charges unless otherwise noted.
Textron reorganized its management reporting structure into five segments, separately reporting
Fastening Systems and Industrial Products, which previously comprised the Industrial segment.
Additionally, management responsibility for one division previously reported in the Automotive
segment has been transferred to the Industrial Products segment. Prior periods have been
restated to reflect these changes.
Segment profit of $1.410 billion increased 17% from $1.201 billion in 1999, as a result of continued
improved financial results in Aircraft, Automotive, Industrial Products and Finance. Segment profit in
Fastening Systems decreased slightly. Segment profit represents the measurement used by
Textron to evaluate performance for decision making purposes and for manufacturing segments
does not include interest, certain corporate expenses, special charges and gains and losses from the
disposition of significant business units. The measurement for the Finance segment includes inter-
est income, interest expense and distributions on preferred securities of Finance subsidiary trust.
Segment profit reflected gains associated with the sale of several small non-core product lines
and joint ventures, and fixed assets in the manufacturing segments and the benefit of higher
income related to the syndication and securitization of several portfolios in the Finance segment.
Additionally, segment profit benefited from higher income related to retirement benefits, reflecting
a higher expected return on plan assets and revised actuarial estimates.
Total segment margin increased to 10.8% in 2000 from 10.1% in 1999, due primarily to higher
Aircraft and Automotive margins.
Effective in the fourth quarter 2000, Textron reclassified certain items in its income statement and
restated revenues and costs for prior periods. A substantial portion of the reclassifications related
to the adoption of Emerging Issues Task Force (EITF) consensus on Issue No. 99-19 “Reporting
Revenue Gross as a Principal versus Net as an Agent”, whereby used aircraft sales are now reported
as revenues; previously they were netted against costs. Prior period financial information has been
reclassified to conform with the current year presentation. The result of the reclassifications was to
increase revenue and costs by $254 million, $275 million and $191 million for 2000, 1999 and 1998,
respectively. There was no effect on income from continuing operations or net income.
Effective January 2000, Textron implemented the EITF consensus on Issue 99-5 “Accounting for
Pre-Production Costs Related to Long Term Supply Arrangements.” As a result of this, in the first
quarter 2000, Textron reported a cumulative effect of change in accounting principle of $59 million
(net of tax), or approximately $0.41 per share related to the adoption of this consensus.
Textron completed the sale of Avco Financial Services (AFS) to Associates First Capital Corporation
for $3.9 billion in cash on January 6, 1999 and recorded an after-tax gain of $1.65 billion or $10.70
per share. Textron also recorded an extraordinary loss of $43 million (net of tax) or $.27 per share
on the early retirement of debt in 1999. Net income (including the cumulative effect of the change
$9,874
$11,854
$13,090
Revenues
98 00
10%
99
20%11%
Management’s Discussion and Analysis
Results of Operations
Earnings
per Share*
$2.68
$4.05
$1.90
00
(53)%
99
51%
98
22%
*Income from continuing
operations – diluted
21 TEXTRON 2000 ANNUAL REPORT