E-Z-GO 2000 Annual Report Download - page 42

The consolidated financial statements include the accounts of Textron and all of its majority- and
wholly-owned subsidiaries. All significant intercompany transactions are eliminated.
Textron’s financings are conducted through two borrowing groups, Textron Finance and Textron
Manufacturing. This framework is designed to enhance the Company’s borrowing power by separating
the Finance segment. Textron Finance consists of Textron Financial Corporation consolidated with its
subsidiaries, which are the entities through which Textron operates its Finance segment. Textron
Finance finances its operations by borrowing from its own group of external creditors.
Textron Manufacturing is Textron Inc., the parent company, consolidated with the entities which
operate in the Aircraft, Automotive, Fastening Systems and Industrial Products business segments.
During 2000, Textron reorganized its management reporting structure into five segments, separately
reporting the financial results of Fastening Systems and Industrial Products, which previously com-
prised the Industrial segment. Additionally, management responsibility for one division previously in
the Automotive segment has been transferred to the Industrial Products segment. Prior period data
shown in the financial statements and related notes have been reclassified, as appropriate.
The preparation of these financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect these statements
and accompanying notes. Some of the more significant estimates include inventory valuation, residual
values of leased assets, allowance for credit losses on finance receivables, product liability, workers
compensation, environmental and warranty reserves, and amounts reported under long-term con-
tracts. Management’s estimates are based on the facts and circumstances available at the time
estimates are made, past historical experience, risk of loss, general economic conditions and trends
and management’s assessments of the probable future outcome of these matters. Consequently,
actual results could differ from such estimates.
During 1999, Textron Manufacturing entered into a promissory note agreement with Textron Finance,
whereby Textron Finance could borrow up to $1.25 billion from Textron Manufacturing. The maximum
amount outstanding under this agreement during 1999 was $1.0 billion. The amount of interest expense/
income incurred/earned by Textron Finance and Textron Manufacturing, respectively, was approximately
$15 million for 1999. Textron Finance’s operating income includes interest expense incurred under this
agreement. This agreement was cancelled during the second quarter of 1999.
Acquisitions
During 2000, Textron Manufacturing acquired 11 companies, acquired the minority interests of two
entities and entered into one joint venture at a total cost of $121 million including debt assumed of
$36 million. The largest of these acquisitions were Plascar Indústria e Comérico Ltda. – the leading
supplier of instrument panels and automotive trim products to global manufacturers producing vehi-
cles in South America and Advantage Molding and Decorating – a leading supplier of injection
molded parts, tooling and pad-printed designs.
During 1999, Textron Manufacturing segments acquired 14 companies and entered into two joint
ventures which in turn, each acquired companies. The largest of these acquisitions were Flexalloy Inc.
– a provider of vendor managed inventory services for the North American fastener markets;
OmniQuip International, Inc. – a leading manufacturer of light construction equipment including tele-
scopic material handlers, aerial work platforms and skid steer loaders and InteSys Technologies Inc.
– a provider of plastics and metal engineered assemblies. The total cost of the acquisitions and invest-
ments in joint ventures was approximately $1.2 billion, including treasury stock issued for $32 million
and debt assumed of $308 million.
In addition, in 1999 Textron Finance had acquisitions totaling $1.3 billion, including debt assumed of
$547 million. The largest of these acquisitions were Litchfield Financial Corporation, a commercial
finance company specializing in the vacation ownership (timeshare) industry and the aircraft and fran-
chise finance divisions of GreenTree Financial Servicing Corporation. Capital contributions made by
Textron Manufacturing to Textron Finance in support of these acquisitions were $337 million.
During 1998, Textron acquired nine companies. The largest of these acquisitions were Ransomes
PLC – a UK-based manufacturer of commercial turf-care machinery; Ring Screw Works – a
Michigan-based supplier of specialty threaded fasteners to the automotive industry; and David
Brown Group PLC – a UK-based designer and manufacturer of industrial gears and mechanical and
hydraulic transmission systems. The total cost of these acquisitions was approximately $1.1 billion,
including notes issued for approximately $160 million. In addition, approximately $230 million of
debt was assumed as a result of these acquisitions.
The purchase method of accounting has been used for all acquisitions during the past three years.
Acquisitions and Dispositions2
TEXTRON 2000 ANNUAL REPORT 40