E-Z-GO 2000 Annual Report Download - page 32

Download and view the complete annual report

Please find page 32 of the 2000 E-Z-GO annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 68

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68

Effective January 1, 1999, the European Economic and Monetary Union entered into a transition
phase during which a common currency, the Euro, was introduced into participating countries. The
Euro conversion has not had a material impact on Textron’s business.
Quantitative Risk Measures
Textron has used a sensitivity analysis to quantify the market risk inherent in its financial instruments.
Financial instruments held by the Company that are subject to market risk (interest rate risk, foreign
exchange rate risk and equity price risk) include finance receivables (excluding lease receivables),
debt (excluding lease obligations), interest rate exchange agreements, foreign exchange contracts,
currency swaps, marketable equity securities and marketable security price forward contracts.
Presented below is a sensitivity analysis of the fair value of Textron’s financial instruments at year-end.
The following table illustrates the hypothetical change in the fair value of the Company’s financial instru-
ments at year-end assuming a 10% decrease in interest rates, a 10% strengthening in exchange rates
against the U.S. dollar and a 10% decrease in the quoted market prices of applicable marketable equity
securities. The estimated fair value of the financial instruments was determined by discounted cash
flow analysis and by independent investment bankers. This sensitivity analysis is most likely not indica-
tive of actual results in the future.
2000 1999
Hypothetical Hypothetical
Carrying Fair Change In Carrying Fair Change In
(In millions) Value Value Fair Value Value Value Fair Value
Interest Rate Risk
Textron Manufacturing:
Debt $2,061 $2,105 $31 $1,745 $1,740 $ 22
Interest rate
exchange agreements –(8) (9) – 7 (10)
Textron Finance:
Finance receivables 4,767 4,840 31 4,624 4,642 57
Interest rate
exchange agreements –(6) (5) –– –
Debt 4,667 4,688 33 4,551 4,535 38
Interest rate
exchange agreements –17 10 – (2) 1
Foreign Exchange Rate Risk
Textron Manufacturing:
Debt 1,101 1,113 111 285 286 23
Foreign exchange contracts (1) (1) (15) – (6) (22)
Currency swaps –– –(21) (25) 88
Interest rate
exchange agreements –– – –1 –
Textron Finance:
Debt 50 50 5 –– –
Foreign exchange contracts –– (2) –– –
Currency swaps –11–– –
Equity Price Risk
Textron Manufacturing:
Available for sale securities 16 16 (2) –– –
Marketable security price
forward contracts (26) (26) (8) 5 5 (12)
TEXTRON 2000 ANNUAL REPORT 30