E-Z-GO 2000 Annual Report Download - page 24

in accounting principle and the special charges in 2000) was $218 million or $1.49 per share com-
pared to 1999 net income of $2.23 billion or $14.48 per share, which included the gain on the sale
of AFS and the extraordinary loss.
Interest income and expense – the net interest expense for Textron Manufacturing increased $123
million due to the re-leveraging that occurred following the divestiture of AFS. Interest expense
increased $102 million due to a higher level of average debt as a result of acquisitions and share
repurchases. Interest income for 2000 of $6 million was related to the settlement of a note receiv-
able compared to income of $27 million realized in 1999 as a result of its net investment position.
Corporate expenses and other, net increased $21 million due primarily to the impact of organiza-
tional changes in the first and fourth quarters and costs associated with strategic and e-business
initiatives in 2000, partially offset by higher income related to retirement benefits.
Income taxes – the effective income tax rate for 2000 was 50.4% primarily due to the impact of
the non-tax deductibility of goodwill written off in the fourth quarter. The impact of the special
charges on the effective tax rate was 14.9%. Excluding the tax impact of the special charges, the
effective tax rate was 35.5% for 2000 compared to 37.0% in 1999. This reduction is primarily due to
the benefit of tax planning initiatives being realized in 2000 and the tax benefit of a contribution
of shares granted to Textron in 1999 from Manulife Financial Corporation’s initial public offering on
their demutualization of Manufacturers Life Insurance Company to the Textron Charitable Trust.
As a result of the softening economy, especially in the automotive industry, Textron anticipates slower
growth rates for 2001, particularly in the first quarter. To strengthen operating efficiencies and better
align its operations with current economic and market conditions in its Automotive, Fastening
Systems and Industrial Products segments, Textron expects to incur additional restructuring charges
over the next four to five quarters as the restructuring efforts are implemented.
1999 vs.1998
Income from continuing operations in 1999 of $623 million was up 41% from $443 million in 1998.
Diluted earnings per share from continuing operations in 1999 of $4.05 were up 51% from $2.68
in 1998. Revenues increased 20% to $11.9 billion in 1999 from $9.9 billion in 1998.
Segment profit of Textron’s five 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 margin decreased to 10.1% in 1999 from 10.5% in 1998, due primarily to lower
Aircraft margins and the impact of lower margin acquisitions.
Net income in 1999, including the gain on the sale of AFS and the extraordinary loss, was $2.23
billion or $14.48 per share, compared to $608 million in 1998 or $3.68 per share, which included
$165 million of discontinued operating income from AFS.
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 associ-
ated with acquisitions and share repurchases.
Aircraft
2000 vs.1999
The Aircraft segment’s revenues and profit increased $375 million (9%) and $89 million (25%),
respectively, achieving a 130 basis point improvement in margin.
Cessna Aircraft’s revenues increased $342 million due to higher sales of business jets, primarily
the Citation Excel and the Citation Bravo, and increased spares and service revenues. Its profit
increased as a result of the higher sales and improved operating performance, partially offset by
increased engineering expense related to the Sovereign business jet.
TEXTRON 2000 ANNUAL REPORT 22