E-Z-GO 2004 Annual Report Download - page 101

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The following notes and calculation pertain to the table contained within the Chairman’s Letter:
(1) During 2004, Textron reached a final decision to sell the remainder of its InteSys business. During 2003, Textron sold its remaining OmniQuip busi-
ness and the small business direct portfolio. The financial results of these businesses have been reclassified as discontinued operations for account-
ing purposes.
(2) Segment profit represents the measurement used by Textron to evaluate performance for decision-making purposes. Segment profit does not include
interest expense of the manufacturing segments, certain corporate expenses, special charges and gains and losses from the disposition of significant
business units. Special charges in 2004 include $143 million in restructuring expenses and a $12 million gain on the sale of the remaining shares of
C&A common stock. Special charges in 2003 include $137 million of restructuring expenses and a $15 million charge for unamortized issuance costs
related to the redemption of preferred securities.
(3) Before income taxes and distributions on preferred securities of subsidiary trusts.
(4) Free cash flow in 2004 includes Textron Manufacturing's net cash flow from operations of $973 million, after-tax cash used for restructuring activities
of $67 million and proceeds on sale of fixed assets of $46 million, less capital expenditures and capital leases of $334 million. Free cash flow in 2003
includes Textron Manufacturing's net cash flow from operations of $691 million, after-tax cash used for restructuring activities of $54 million and pro-
ceeds on sale of fixed assets of $55 million, less capital expenditures and capital leases of $306 million.
(5) Textron’s calculation of ROIC is as follows:
(Dollars in millions)
2004 2003
ROIC Income
Net Income $ 365 $ 259
Special charges 131 152
Gain on sale of businesses — (15)
Tax impact of special charges and gains on sale of businesses (35) (41)
Loss from discontinued operations, net of income taxes 8 33
Operating income (loss) from discontinued operations, net of income taxes 2 (5)
Distribution on preferred securities of subsidiary trusts, net of income taxes — 13
Amortization of intangible assets, net of income taxes 3 6
Interest expense, net of income taxes 60 61
Interest cost on accrued postretirement benefits
other than pensions, net of income taxes 25 25
ROIC Income $ 559 $ 488
Average Invested Capital
Total shareholders’ equity $ 3,671 $ 3,548
Total Textron Manufacturing debt 1,909 1,868
Cash and cash equivalents for Textron Manufacturing, including discontinued operations (546) (386)
Textron Manufacturing mandatorily redeemable preferred securities — 243
Accrued postretirement benefits other than pensions, net of income taxes 360 375
Average Invested Capital $ 5,394 $ 5,648
ROIC 10.4% 8.6%
(6) A reconciliation of diluted EPS from continuing operations is as follows:
2004 2003
Income from continuing operations (GAAP) $ 2.66 $ 2.13
Special Items:
Restructuring .75 .72
Unamortized issuance costs written off upon
redemption of preferred securities — .07
Sale of C&A common stock (.06) —
Gain on sale of businesses — (.09)
Income from continuing operations before special items $ 3.35 $ 2.83