E-Z-GO 2005 Annual Report Download - page 30

10
Textron Inc.
Currency, raw material price and interest rate fluctuations may adversely affect our results.
We are exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates, raw material prices and interest
rates. We monitor and manage these exposures as an integral part of our overall risk management program. In some cases, we purchase deriva-
tives or enter into contracts to insulate our financial results of operations from these fluctuations. Nevertheless, changes in currency exchange
rates, raw material prices and interest rates can have substantial adverse effects on our financial results of operations.
The increasing costs of certain employee and retiree benefits could adversely affect our results.
Our earnings and cash flow may be impacted by the amount of income or expense we expend or record for employee benefit plans. This is partic-
ularly true for our pension plans, which are dependent on actual plan asset returns and factors used to determine the value and current costs of
plan benefit obligations.
In addition, medical costs are rising at a rate faster than the general inflation rate. Continued medical cost inflation in excess of the general infla-
tion rate increases the risk that we will not be able to mitigate the rising costs of medical benefits. Increases to the costs of pension and medical
benefits could have an adverse effect on our financial results of operations.
Unanticipated changes in Textron’s tax rates or exposure to additional income tax liabilities could affect our profitability.
We are subject to income taxes in both the United States and various foreign jurisdictions, and our domestic and international tax liabilities are
subject to the allocation of income among these different jurisdictions. Our effective tax rates could be adversely affected by changes in the mix of
earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or in tax laws, which could
affect our profitability. In particular, the carrying value of deferred tax assets is dependent on our ability to generate future taxable income. In addi-
tion, the amount of income taxes we pay is subject to audits in various jurisdictions, and a material assessment by a tax authority could affect our
profitability.
Item 1B. Unresolved Staff Comments
None
Item 2. Properties
In December 2005, our Board of Directors authorized the divestiture of the Textron Fastening Systems business as discussed in Note 2 to the
Consolidated Financial Statements. As of December 31, 2005, the Fastening Systems business included 19 plants located throughout the United
States and 20 plants outside of the United States. Of the total of 39 plants operated in the Fastening Systems business, we owned 28, with the bal-
ance leased, and had total manufacturing space of approximately 10.7 million square feet.
On December 31, 2005, excluding Textron Fastening Systems’ plants, we operated a total of 77 plants located throughout the United States and 58
plants outside the United States. Of the total of 135 plants, we owned 65 and the balance was leased. In the aggregate, the total manufacturing
space was approximately 21.4 million square feet.
We also own or lease offices, warehouse and other space at various locations. We consider the productive capacity of the plants operated by each
of our business segments to be adequate. In general, our facilities are in good condition, are considered to be adequate for the uses to which they
are being put and are substantially in regular use.