E-Z-GO 2005 Annual Report Download - page 107

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The following notes and calculation pertain to the table contained within the Chairman’s Letter:
(1) In 2005, Textron's Board of Directors approved a plan to sell the Fastening Systems business. As a result, the financial results of the Fastening
Systems business for the periods presented have been reclassified to discontinued operations for accounting 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.
(3) Free cash flow in 2005 includes Textron Manufacturing’s net cash flow from operations of $894 million and proceeds from the sale of property, plant
and equipment of $23 million, less capital expenditures of $356 million and capital lease additions of $15 million. Free cash flow in 2004 includes
Textron Manufacturing’s net cash flow from operations of $973 million and proceeds from the sale of property, plant and equipment of $38 million, less
capital expenditures of $238 million and capital lease additions of $44 million.
(4) Textron’s calculation of ROIC is as follows:
(Dollars in millions)
2005 2004
ROIC Income
Net income $ 203 $ 365
Special charges* 112 59
Gain on sale of businesses/product lines (30) —
Tax impact of special charges and gains on sale of businesses/product lines (13) (19)
Loss from discontinued operations, net of income taxes 313 10
Adjustments to loss from discontinued operations, net of income taxes** (12) 56
Amortization of intangible assets, net of income taxes 2 3
Textron Manufacturing interest expense including discontinued operations, net of income taxes 58 60
ROIC Income $ 633 $ 534
Average Invested Capital
Total shareholders’ equity $ 3,464 $ 3,671
Total Textron Manufacturing debt, including discontinued operations 1,872 1,909
Cash and cash equivalents for Textron Manufacturing, including discontinued operations (711) (546)
Eliminate impact of 2005 charges 166 —
Average Invested Capital $ 4,791 $ 5,034
ROIC 13.2% 10.6%
* 2005 special charges exclude restructuring costs of $6 million.
** Amounts represent adjustments to ROIC income for certain operating (losses) and income included in discontinued operations.
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