E-Z-GO 2001 Annual Report Download - page 22

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At this time, there are no indications that the w eakened economy has begun to recover. Textron
anticipates the economy w ill remain sluggish at least for the first half of 2002. To strengthen
operating efficiencies and better align its operations with current economic and market conditions in
its manufacturing businesses, Textron expects to continue to incur restructuring charges from its
previously announced program throughout 2002.
2000 vs. 1999
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Revenues increased to $13.1 billion in 2000 from $11.9 billion in 1999. Income from continuing
operations for 2000 was $277 million, dow n from $623 million in 1999. Diluted earnings per share
from continuing operations w ere $1.90 and $4.05 for 2000 and 1999, respectively. Net income
(including the cumulative effect of a change in accounting principle and special charges) in 2000 was
$218 million or $1.49 per share compared to 1999 net income of $2.23 billion or $14.48 per share,
which included a gain on the sale of Avco Financial Services (AFS) in January 1999.
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Special charges of $483 million in 2000 include restructuring charges of $17 million, associated w ith
the modernization and consolidation of manufacturing facilities in the Automotive and Industrial
Products segments, $349 million for goodw ill impairment and $117 million for the write-down of
Textron’s e-business investment portfolio.
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Segment profit of $1.410 billion increased from $1.201 billion in 1999, as a result of continued improved
financial results in Aircraft, Automotive, Industrial Products and Finance, and higher income related to
retirement benefits, reflecting a higher expected return on plan assets and revised actuarial estimates.
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Total segment margin increased to 10.8% in 2000 from 10.1% in 1999, due primarily to higher Aircraft
and Automotive margins.
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Effective January 2000, Textron implemented the EITF consensus on Issue No. 99-5 “ Accounting for
Pre-Production Costs Related to Long Term Supply Arrangements.” As a result of this, in the first
quarter 2000, Textron reported a cumulative effect of a change in accounting principle of $59 million
(net of tax), or $0.41 per share related to the adoption of this consensus.
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Textron completed the sale of AFS to Associates First Capital Corporation for $3.9 billion in cash in
January 1999 and recorded an after-tax gain of $1.65 billion or $10.70 per share. Textron also recorded
an extraordinary loss of $43 million (net of tax) or $0.27 per share on the early retirement of debt in 1999.
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Corporate expenses and other, net increased $21 million due primarily to the impact of organizational
changes and costs associated with strategic and e-business initiatives in 2000, partially offset by
higher income related to retirement benefits.
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Net interest expense for Textron M anufacturing increased $123 million. 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 receivable compared
to income of $27 million realized in 1999 as a result of Textron’s net investment position during the
year.
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Income taxes – the effective income tax rate for 2000 w as 50.4% primarily due to the impact of the
non-tax deductibility of goodw ill 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 M anulife Financial Corporation’s initial public offering on their demutualization
of M anufacturers Life Insurance Company.
20 Textron Annual Report