E-Z-GO 2005 Annual Report Download - page 78

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Fair Values of Financial Instruments
The carrying amounts and estimated fair values of Textron’s financial instruments that are not reflected in the financial statements at fair value are
as follows:
December 31, 2005 January 1, 2005
Estimated Estimated
Carrying Fair Carrying Fair
(In millions)
Value Value Value Value
Textron Manufacturing:
Debt $ (1,934) $ (2,012) $ (1,770) $ (1,881)
Textron Finance:
Finance receivables $ 5,589 $ 5,515 $ 4,793 $ 4,747
Debt $ (5,420) $ (5,423) $ (4,783) $ (4,864)
Finance receivables exclude the fair value of finance and leveraged leases totaling $1.1 billion at December 31, 2005 and $0.9 billion at January
1, 2005 as these leases are recorded at fair value in the Consolidated Balance Sheets.
Note 11. Mandatorily Redeemable Preferred Securities
Textron adopted SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity,” in the third quarter of
2003. Upon adoption, Textron Finance classified its obligated mandatorily redeemable preferred securities previously classified as equity as a liability.
In June 2004, Textron Financial Corporation redeemed all of its $26 million Litchfield 10% Series A Junior Subordinated Debentures, due 2029.
The debentures were held by a trust sponsored and wholly owned by Litchfield Financial Corporation, a subsidiary of Textron Financial Corpora-
tion. The proceeds from the redemption were used to redeem all of the $26 million Litchfield Capital Trust I 10% Series A Trust Preferred Securi-
ties at par value of $10 per share. There was no gain or loss on the redemption.
In July 2003, Textron redeemed its 7.92% Junior Subordinated Deferrable Interest Debentures, due 2045. The debentures were held by Textron’s
wholly owned trust, and the proceeds from their redemption were used to redeem all of the $500 million Textron Capital I trust preferred securities
with a 7.92% dividend yield. Upon the redemption, $15 million in unamortized issuance costs were written off and recorded in Special Charges.
Note 12. Shareholders’ Equity
Capital Stock
Textron has authorization for 15,000,000 shares of preferred stock and 500,000,000 shares of 12.5 cent per share par value common stock. Each
share of $2.08 Preferred Stock ($23.63 approximate stated value) is convertible into 4.4 shares of common stock and can be redeemed by Textron
for $50 per share. Each share of $1.40 Preferred Dividend Stock ($11.82 approximate stated value) is convertible into 3.6 shares of common
stock and can be redeemed by Textron for $45 per share.
Reserved Shares of Common Stock
At the end of 2005, common stock reserved for the subsequent conversion of preferred stock and shares reserved for the exercise of stock options
were 2,596,000 and 8,146,000, respectively.
Income per Common Share
A reconciliation of income from continuing operations and basic to diluted share amounts is presented below:
2005 2004 2003
Average Average Average
(Dollars in millions, shares in thousands)
Income Shares Income Shares Income Shares
Income from continuing operations
available to common shareholders $ 516 133,531 $ 375 137,337 $ 302 135,875
Dilutive effect of convertible preferred
stock and stock options — 2,915 — 2,832 — 1,342
Available to common shareholders and
assumed conversions $ 516 136,446 $ 375 140,169 $ 302 137,217
58
Textron Inc.