E-Z-GO 2004 Annual Report Download - page 72

Note 6 Property, Plant and Equipment, net
Property, plant and equipment, net for Textron Manufacturing is composed of the following:
January 1, January 3,
(In millions) 2005 2004
Land and buildings $ 1,210 $ 1,084
Machinery and equipment 3,364 3,256
4,574 4,340
Less accumulated depreciation and amortization 2,652 2,439
$ 1,922 $ 1,901
Note 7 Goodwill and Other Intangible Assets
On December 30, 2001, Textron adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” which required companies to
stop amortizing goodwill and certain intangible assets with indefinite useful lives and requires an annual review for impairment. All
existing goodwill as of December 30, 2001 was required to be tested for impairment on a reporting unit basis. With the implemen-
tation in 2002, an after-tax transitional impairment charge of $488 million ($561 million, pre-tax) was taken in the second quarter
and retroactively recorded in the first quarter. The after-tax charge is included in the caption “Cumulative effect of change in
accounting principle, net of income taxes” and relates to the following segments: $385 million in Industrial, $88 million in Fasten-
ing Systems and $15 million in Finance. For the Industrial and Fastening Systems segments, the primary factor resulting in the
impairment charge was the decline in demand in certain industries in which these segments operate, especially the telecommuni-
cations industry, due to the economic slowdown. The Finance segment’s impairment charge related to the franchise finance divi-
sion and was primarily the result of decreasing loan volumes and an unfavorable securitization market. No impairment charge was
appropriate for these segments under the previous goodwill impairment accounting standard, which Textron applied based on
undiscounted cash flows.
Textron also adopted the remaining provisions of SFAS No. 141, “Business Combinations,” on December 30, 2001. These provi-
sions broaden the criteria for recording intangible assets separate from goodwill and require that certain intangible assets that do
not meet the new criteria, such as assembled workforce and customer base, be reclassified into goodwill. Upon adoption of these
provisions, intangible assets totaling $37 million, net of related deferred taxes, were reclassified into goodwill within the Industrial
and Finance segments.
Changes in goodwill are summarized below:
Fastening
(In millions) Bell Cessna Systems Industrial Finance Total
Balance at December 29, 2001 $ 101 $ 306 $ 473 $ 931 $ 192 $ 2,003
Reclassification of intangible assets — — — 36 1 37
Transitional impairment charge — — (100) (437) (24) (561)
Foreign currency translation — — 17 26 — 43
Balance at December 28, 2002 $ 101 $ 306 $ 390 $ 556 $ 169 $ 1,522
Foreign currency translation — — 30 37 — 67
Balance at January 3, 2004 $ 101 $ 306 $ 420 $ 593 $ 169 $ 1,589
Acquisitions/dispositions — 16 — (20) — (4)
Foreign currency translation — — 20 20 — 40
Other — — (3) (14) — (17)
Balance at January 1, 2005 $ 101 $ 322 $ 437 $ 579 $ 169 $ 1,608
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Textron Inc.