E-Z-GO 2001 Annual Report Download - page 56

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The 2001 health care cost trend rate, which is the weighted average annual assumed rate of increase in
the per capita cost of covered benefits, was 8% for all retirees. This rate is assumed to decrease to 5.5%
by 2005 and then remain at that level. A one-percentage-point change in assumed health care cost trend
rate would have the follow ing effects:
(In millions) 1% Increase 1% Decrease
Effect on total of service and interest cost components $ 5 $ (4)
Effect on postretirement benefit obligation $54 $(47)
Textron files a consolidated federal income tax return for all U.S. subsidiaries and separate returns for
foreign subsidiaries.
Income from continuing operations before income taxes and distributions on preferred securities of subsidiary
trusts is as follows:
(In millions) 2001 2000 1999
United States $451 $366 $ 831
Foreign (32) 245 199
Total $419 $611 $ 1,030
Income tax expense is summarized as follow s:
(In millions) 2001 2000 1999
Federal:
Current $136 $246 $ 222
Deferred 48 (37) 54
State 26 35 36
Foreign 17 64 69
Income tax expense $227 $308 $ 381
The following reconciles the federal statutory income tax rate to the effective income tax rate reflected in
the consolidated statements of income:
2001 2000 1999
Federal statutory income tax rate 35.0)%35.0)%35.0)%
Increase (decrease) in taxes resulting from:
State income taxes 2.7 3.8 2.3
Goodw ill 22.3 19.0 2.2
Permanent items from Automotive Trim disposition 2.7 ––
Foreign tax rate differential (0.9) (2.2) 0.6
Foreign sales corporation benefit (2.9) (1.9) (0.9)
Other, net (4.7) (3.3) (2.2)
Effective income tax rate 54.2)%50.4)%37.0)%
Textron’s net deferred tax asset consisted of gross deferred tax assets of $1.7 billion and gross deferred
tax liabilities of $1.7 billion at year-end 2001 and $1.7 billion and $1.5 billion, respectively, at year-end 2000.
The tax effects of temporary differences that give rise to significant portions of Textron’s net deferred tax
assets and liabilities w ere as follow s:
December 29),December 30),
(In millions) 2001 2000
Deferred tax assets:
Self insured liabilities, (including environmental) $110 $146
Deferred compensation 140 140
Obligation for postretirement benefits 44 118
Investment securities 945
Allow ance for credit losses 49 44
Amortization of goodw ill and other intangibles 30 37
Other, principally timing of other expense deductions 280 278
Total deferred tax assets $662 $808
Deferred tax liabilities:
Textron Finance transactions, principally leasing $(387) $(366)
Fixed assets, principally depreciation (150) (190)
Inventory (59) (53)
Currency translation adjustment (29) (26)
Total deferred tax liabilities (625) (635)
Net deferred tax assets $37 $173
13. Income Taxes
54 Textron Annual Report