E-Z-GO 2000 Annual Report Download - page 54

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The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for
the pension plans with accumulated benefit obligations in excess of plan assets were $199 million,
$161 million and $10 million, respectively, as of year-end 2000, and $191 million, $159 million and
$16 million, respectively, as of year-end 1999.
The following summarizes the net periodic benefit cost for the pension benefits and postretire-
ment benefits plans: Postretirement Benefits
Pension Benefits Other than Pensions
December 30, January 1, January 2, December 30, January 1, January 2,
(In millions) 2000 2000 1999 2000 2000 1999
Components of net
periodic benefit cost
Service cost $ 101 $ 109 $ 83 $ 6 $7 $6
Interest cost 265 252 235 45 41 45
Expected return on plan assets (423) (378) (323) –––
Amortization of
unrecognized transition asset (17) (17) (17) –––
Recognized actuarial (gain)/loss (24) 21 (8) (10) (9)
Recognized prior service cost 14 16 14 (4) (4) (4)
Curtailments ––– (1) ––
Net periodic benefit cost $ (84) $ (16) $ (7) $38 $ 34 $38
Recognized actuarial (gain)/loss on net pension benefits is being amortized over a twelve year period.
Major actuarial assumptions used in accounting for defined benefit pension plans are presented
below.
December 30, January 1, January 2, January 3,
2000 2000,1999,1998,
Weighted average assumptions at year-end
Discount rate 7.50% 7.50% 6.75% 7.25%
Expected return on plan assets 9.25 9.25 9.25 9.00
Rate of compensation increase 4.80 4.80 4.80 5.00
Postretirement benefit plan discount rates are the same as those used by Textron’s defined ben-
efit pension plans.
The 2000 health care cost trend rate, which is the weighted average annual assumed rate of increase
in the per capita cost of covered benefits, was 6% for retirees age 65 and over and 6% for retirees under
age 65. Both rates are assumed to decrease to 5.5% by 2003 and then remain at that level. A one-
percentage-point change in assumed health care cost trend rates would have the following effects:
(In millions) 1% Increase 1% Decrease
Effect on total of service and interest cost components $ 5 $ (5)
Effect on postretirement benefit obligation 56 (48)
Textron files a consolidated federal income tax return for all U.S. subsidiaries and separate returns
for foreign subsidiaries. Textron recognizes deferred income taxes for temporary differences
between the financial reporting basis and income tax basis of assets and liabilities based on
enacted tax rates expected to be in effect when amounts are likely to be realized or settled.
The following table shows income from continuing operations before income taxes and distribu-
tions on preferred securities of subsidiary trusts:
(In millions) 2000 1999 1998
United States $366 $ 831 $582
Foreign 245 199 181
To t al $611 $1,030 $763
Income tax expense is summarized as follows:
(In millions) 2000 1999 1998
Federal:
Current $246 $222 $225
Deferred (37) 54 (25)
State 35 36 33
Foreign 64 69 61
Income tax expense $308 $381 $294
Income Taxes16
TEXTRON 2000 ANNUAL REPORT 52