E-Z-GO 2004 Annual Report Download - page 82

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Income tax expense for continuing operations is summarized as follows:
(In millions)
2004 2003 2002
Federal:
Current $ 33 $ 40 $ 54
Deferred 61 8 82
State 13 15 15
Foreign 48 49 25
Income tax expense $ 155 $ 112 $ 176
The following reconciles the federal statutory income tax rate to the effective income tax rate reflected in the consolidated state-
ments of operations:
2004 2003 2002
Federal statutory income tax rate 35.0% 35.0% 35.0%
Increase (decrease) in taxes resulting from:
State income taxes 1.6 2.3 1.8
Special foreign dividend 2.1 — —
Permanent items from Trim divestiture — — 1.2
Favorable tax settlements — (3.1) (2.1)
ESOP dividends (1.6) (2.2) (3.1)
Foreign tax rate differential (5.9) (2.1) (0.5)
Export sales benefit (1.1) (1.4) (1.5)
Other, net (0.7) (1.6) (0.2)
Effective income tax rate 29.4% 26.9% 30.6%
The tax effects of temporary differences that give rise to significant portions of Textron’s net deferred tax assets and liabilities were
as follows:
January 1, January 3,
(In millions)
2005 2004
Deferred tax assets:
Deferred revenue $ 31 $ 15
Restructuring reserve 25 11
Warranty and product maintenance reserves 99 110
Self-insured liabilities, including environmental 98 90
Deferred compensation 166 156
Obligation for postretirement benefits 30 31
Investment securities — 20
Allowance for credit losses 75 77
Amortization of goodwill and other intangibles 35 52
Loss carryforwards 91 52
Other, principally timing of other expense deductions 132 59
Total deferred tax assets 782 673
Valuation allowance for deferred tax assets (155) (74)
$ 627 $ 599
Deferred tax liabilities:
Textron Finance transactions, principally leasing $ (505) $ (442)
Property, plant and equipment, principally depreciation (130) (113)
Inventory (48) (24)
Currency translation adjustment (3) (6)
Total deferred tax liabilities (686) (585)
Net deferred tax (liability) asset $ (59) $ 14
61
Textron Inc.