E-Z-GO 2004 Annual Report Download - page 80

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Pension Benefits
The accumulated benefit obligation for all defined benefit pension plans was $5.0 billion at January 1, 2005 and $4.4 billion
at January 3, 2004. Pension plans with accumulated benefit obligations exceeding the fair value of plan assets were as follows
at year-end:
(In millions)
2004 2003
Projected benefit obligation $ 2,282 $ 798
Accumulated benefit obligation $ 2,053 $ 716
Fair value of plan assets $ 1,700 $ 417
In addition to the plans in the above table, Textron has plans with the projected benefit obligation in excess of plan assets as
follows:
(In millions)
2004 2003
Projected benefit obligation $ 67 $ 1,238
Accumulated benefit obligation $ 44 $ 1,129
Fair value of plan assets $ 44 $ 1,167
Textron’s pension assets are invested with the objective of achieving a total rate of return over the long term, sufficient to fund
future pension obligations and to minimize future pension contributions. Textron is willing to tolerate a commensurate level of risk
to achieve this objective based on the funded status of the plans and the long-term nature of Textron’s pension liability. Risk is con-
trolled by maintaining a portfolio of assets that is diversified across a variety of asset classes, investment styles and investment
managers. All of the assets are managed by external investment managers, and the majority of the assets are actively managed.
Where possible, investment managers are prohibited from owning Textron stock in the portfolios that they manage on behalf of
Textron.
Asset allocation target ranges were established consistent with the investment objectives, and the assets are rebalanced periodi-
cally. The expected long-term rate of return on plan assets was determined based on a variety of considerations, including the
established asset allocation targets and expectations for those asset classes, historical returns of the plans’ assets and the advice
of outside advisors. At January 1, 2005, the target allocation range is 44%-70% for equity securities, 13%-33% for debt securities
and 7%-13% for both real estate and for other assets.
Textron’s percentages of the fair value of total pension plan assets by major category are as follows:
January 1, January 3,
Asset Category 2005 2004
Equity securities 59% 61%
Debt securities 24% 24%
Real estate 8% 7%
Other 9% 8%
Total 100% 100%
59
Textron Inc.