E-Z-GO 2000 Annual Report Download - page 27

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increase in profit was partially offset by lower organic sales and unfavorable operating performance
at OmniQuip, TECT and Textron Fluid Handling Products. During the fourth quarter 2000, Textron
recorded a write-down of TECT goodwill for $178 million as discussed below under the heading
“Special Charges, Net.”
In order to address performance issues in certain businesses and better align itself with current
economic and market conditions, Textron has approved restructuring programs at OmniQuip,
Greenlee, Golf and Turf, Textron Motion Control, Textron Power Transmission, Textron Fluid Handling
Products and Textron Systems.
1999 vs.1998
The Industrial Products segment revenues and profit increased $409 million (20%) and $69 million
(30%), respectively. Revenues increased as a result of the contribution from acquisitions, primarily
David Brown, OmniQuip, Ransomes and Progressive Electronics, and higher organic sales at Golf
and Turf and Greenlee. Its profit increased as a result of the higher sales combined with strong margin
improvement at Golf and Turf and Textron Systems, and a gain on the sale of a product line. These
benefits were partially offset by lower organic sales at Textron Power Transmission, reflecting a
decline in the worldwide mechanical power transmission market, and TECT due to lower customer
requirements, and the impact of the divestiture of Fuel Systems in 1998. In addition, 1998 results
were depressed by a one-month strike at a Golf and Turf plant.
Finance
2000 vs.1999
The Finance segment’s revenues increased $228 million (49%) while profit increased $62 million
(48%). Revenues increased due to a higher level of average receivables ($5.782 billion in 2000 vs.
$4.252 billion in 1999), reflecting a balance of both acquisitive and organic growth, a higher yield on
receivables and higher syndication and securitization income ($34 million in 2000 vs. $14 million in
1999). Segment profit increased as the benefit of the higher revenues was partially offset by higher
expenses related to managed receivables and a higher provision for loan losses.
1999 vs.1998
The Finance segment’s revenues increased $96 million (26%), while profit increased $15 million
(13%). Revenues increased due to a higher level of average receivables ($4.252 billion in 1999 vs.
$3.190 billion in 1998), reflecting both acquisitive and organic growth and an increase in syndication
and servicing fee income. This was partially offset by lower yields on receivables, reflecting lower
prevailing interest rates. Profit increased as the benefit of higher revenues was partially offset by
higher expenses related to growth in managed receivables and a higher provision for loan losses
related to growth in receivables and higher charge-offs in the revolving credit portfolio. This was par-
tially offset by a lower provision for loan losses in the real estate portfolio. Included in 1999 results
was a gain of $4.7 million on the sale of an investment in the third quarter, while third quarter 1998
results included a gain of $3.4 million on the securitization of Textron-related receivables.
Special Charges, Net
As discussed in Note 17, Textron recorded pre-tax charges totaling $483 million in 2000. The charges
include restructuring charges of $16 million associated with the modernization and consolidation of
manufacturing facilities in the Automotive ($1 million) and Industrial Products ($15 million) segments,
$350 million of asset impairment charges in the Industrial Products, Fastening Systems and Automotive
segments, and $117 million for the write-down of the Company’s e-business investment portfolio.
In the fourth quarter 2000, Textron finalized its 2000 restructuring program to strengthen operating
efficiencies and better align its operations with current economic and market conditions in its
Automotive, Fastening Systems and Industrial Products segments. The Company expects to incur
restructuring charges over the next four to five quarters as the restructuring efforts are imple-
mented. Severance costs will be included in the restructuring charges and are based upon established
policies and practices. The total cash cost of the program, before savings, is expected to be
Finance
Revenues
$367
$463
$691
009998
49%26%5%
Segment
Profit
$113
$128
$190
009998
48%13%5%
$232
$301
$343
009998
14%30%23%
Industrial Products
Segment
Profit
25 TEXTRON 2000 ANNUAL REPORT