E-Z-GO 2008 Annual Report Download

Download and view the complete annual report

Please find the complete 2008 E-Z-GO annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 114

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114

Table of contents

  • Page 1

  • Page 2

  • Page 3
    ... the immense impact of the economic crisis, and Textron is no exception. While 2008 Textron revenues rose 13 percent over 2007 to $14.2 billion, orders at Cessna...this challenging economic environment, our stock price declined dramatically in 2008, reï¬,ecting the impact of a recessionary market on ...

  • Page 4
    ... our defense business, which accounted for 24 percent of total revenues in 2008, should continue to drive near- and long-term performance since it is...strong competitive edge. On the talent development front, I'm pleased to report that Bersin & Associates, a leading research and advisory firm, ...

  • Page 5
    ... the CJ4 to market in 2010 and sustain critical investments in the wide-cabin, long-range Columbus, which we first announced in January of 2008. The Columbus continues to generate excitement among our customers and should provide significant revenue and profit growth at Cessna in the latter half...

  • Page 6
    ... is reï¬,ected in its 15th straight year capturing top honors in Professional Pilot magazine's annual customer support survey. Textron Systems: Building the right systems for today's conï¬,icts In 2008, Textron Systems leveraged the prior year's acquisition of AAI Corporation (AAI) and positioned...

  • Page 7
    ... half of the year posed challenges across our remaining industrial companies. On the positive side, E-Z-GO enjoyed nearly 14 percent revenue growth in 2008, thanks largely to the popularity of the RXV golf car. The RXV clearly demonstrates the importance of new Lewis B. Campbell Chairman and Chief...

  • Page 8
    T E X T R O N AT A G L A N C E With the Citation XLS+, Cessna made the world's best-selling business jet even better, adding electronically controlled engines and an all new ï¬,ight deck. From ergonomic avionics to an open cabin, the Bell 429 is one of the most advanced light twin helicopters ever...

  • Page 9
    ... and windshield and headlamp cleaning systems. Finance Textron is executing a new strategic direction for Textron Financial Corporation (TFC). At the end of 2008, we announced our exit from all of TFC's commercial finance business, with the exception of financing for customer purchases of Textron...

  • Page 10
    W E H AV E TA K E N S W I F T A N D D E C I S I V E A C T I O N T O CUT COSTS AND OPTIMIZE CASH FLOW AND EARNINGS THROUGH THIS DOWN CYCLE WHILE L AY I N G T H E F O U N D AT I O N F O R L O N G - T E R M G R O W T H . On track for certification in 2009, we expect the Citation CJ4's advanced ...

  • Page 11
    BOARD OF DIRECTORS Lewis B. Campbell (1) Chairman and Chief Executive Officer Textron Inc. Kathleen M. Bader (2,3) Former President and Chief Executive Officer NatureWorks LLC R. Kerry Clark (2,4) Chairman and Chief Executive Officer Cardinal Health, Inc. Ivor J. Evans (4) Vice Chairman (Retired)...

  • Page 12
    ... cash ï¬,ow measure may not be comparable with similarly titled measures reported by other companies, as there is no definitive accounting standard ...received from dispositions, including any gain/loss on the sale. In 2008, we also adjusted invested capital to eliminate the impact of the Manufacturing ...

  • Page 13
    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 3, 2009 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT ...

  • Page 14
    ... indicated, references to "Textron Inc.," the "Company," "we," "our" and "us" in this Annual Report on Form 10-K refer to Textron Inc. and its consolidated subsidiaries. Since the beginning of 2008, we have conducted our business through five operating segments: Cessna, Bell, Textron Systems...

  • Page 15
    ... production Lot 16, of which 98 have been delivered as of the end of 2008. The U.S. Government's program of record for the V-22 calls for a total ... delivered a combined total of 22 of these aircraft as of the end of 2008. In August 2008, the UH-1Y was approved for full-rate production, and the AH-1Z ...

  • Page 16
    ... products are developed and produced in Germany. Revenues of Kautex accounted for approximately 12%, 14% and 14% of our total revenues in 2008, 2007 and 2006, respectively. Kautex has a limited number of competitors worldwide, some of which are affiliated with the original equipment manufacturers...

  • Page 17
    ...Finance, Golf Finance, Resort Finance and Structured Capital. In October 2008, we announced that, due to market conditions, our Finance segment ... and in order to address our long-term liquidity position, on December 22, 2008, we announced a plan to exit all of the commercial finance business of our...

  • Page 18
    ...have significantly impacted many of our customers during the second half of 2008. As a result, a significant number of Cessna's customers have... Cessna backlog until economic conditions stabilize. U.S. Government Contracts In 2008, approximately 24% of our consolidated revenues were generated by or...

  • Page 19
    ... regarding our research and development expenditures is contained in Note 17 to the Consolidated Financial Statements on pages 84 and 85 of this Annual Report on Form 10-K. Patents and Trademarks We own, or are licensed under, numerous patents throughout the world relating to products, services and...

  • Page 20
    Textron Inc. Operation Enduring Freedom and the Global War on Terrorism; (g) changes in national or international funding priorities, U.S. and foreign military budget constraints and determinations, and government policies on the export and import of military and commercial products; (h) ...

  • Page 21
    ... of liquidity may not be available. Due to unprecedented levels of volatility and disruption in the credit markets beginning in the second half of 2008, we have experienced difficulty in accessing our historical sources of financing at favorable rates and terms. The continued deterioration of the...

  • Page 22
    ... of the buyer, which could adversely affect our business and results of operations. We have customer concentration with the U.S. Government. During 2008, we derived approximately 24% of our revenues from sales to a variety of U.S. Government entities. Our U.S. Government revenues have continued to...

  • Page 23
    Item 1A. Risk Factors subcontractor, irrespective of the quality of our products and services as a subcontractor. In any such event, our financial condition and results of operations could be adversely affected. As a U.S. Government contractor, we are subject to a number of procurement rules and ...

  • Page 24
    Textron Inc. Our joint venture, teaming and other arrangements involve risks and uncertainties. We have entered, and expect to continue to enter, into joint venture, teaming and other arrangements, and these activities involve risks and uncertainties, including the risk of the joint venture or ...

  • Page 25
    Item 1A. Risk Factors claims will have a material effect on our financial position or results of operations. However, litigation is inherently unpredictable, and we could incur judgments or enter into settlements for current or future claims that could adversely affect our financial position or ...

  • Page 26
    ... a Vote of Security Holders No matters were submitted to a vote of our security holders during the last quarter of the period covered by this Annual Report on Form 10-K. Executive Officers of the Registrant The following table sets forth certain information concerning our executive officers as of...

  • Page 27
    ... of Textron since January 1994. Mr. Donnelly joined Textron in June 2008 as Executive Vice President and Chief Operating Officer and was promoted ... per share as reported on the New York Stock Exchange and the dividends paid per share, are provided in the following table: 2008 High First quarter ...

  • Page 28
    ...the S&P IC Indices. The values calculated assume dividend reinvestment. In 2008, we changed our line-of-business index from a custom market-weighted... IC Peer Group $200 $250 $300 $150 $100 $50 2003 2004 2005 2006 2007 2008 Textron S&P 500 S&P 500 A&D S&P 500 IC Peer Group $100.00 100.00 100.00...

  • Page 29
    ... employees at year-end Number of common shareholders at year-end (a) For 2008, special charges include restructuring charges of $64 million and charges related to ... Finance segment totaling $462 million. During the fourth quarter of 2008, we announced our plan to exit portions of our commercial fi...

  • Page 30
    ... recession significantly impacted many of our businesses. On December 22, 2008, we announced our current plan to exit the non-captive commercial ... we incurred special charges totaling $526 million in the fourth quarter of 2008. These charges included a $293 million charge to mark-to-market finance...

  • Page 31
    ...due to growth in the aviation and resort finance businesses in the Finance segment. Segment Profit Segment profit decreased $116 million, or 7%, to $1.5 billion in 2008, compared with 2007. This decrease is primarily due to $272 million in reduced profits in the Finance segment, largely due to an...

  • Page 32
    ...result of the volatility and disruption in the credit markets, and in order to reduce our reliance on short-term funding, on October 13, 2008, our Board of Directors approved the recommendation of management to downsize the Finance segment. The plan approved at that time entailed exiting the Finance...

  • Page 33
    ... in the investment status of the Finance segment's Canadian subsidiary, we incurred $31 million in additional tax expense. Discontinued Operations In November 2008, we completed the sale of our Fluid & Power business unit to Clyde Blowers Limited, a U.K.-based worldwide leader in the areas of power...

  • Page 34
    ...reï¬,ect the manner in which we now manage these businesses. All periods presented herein have been recast to reï¬,ect the 2008 segment reporting structure. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Segment profit for the manufacturing...

  • Page 35
    ... due to higher Citation business jet deliveries, and improved pricing of $212 million. Cessna Segment Profit Cessna's segment profit increased $40 million in 2008, compared with 2007, primarily due to the impact of higher volume of $110 million, pricing in excess of inï¬,ation of $82 million and...

  • Page 36
    ... product lines, which were partially offset by $29 million in lower overhead expense in the commercial business. ARH Program Termination On October 16, 2008, we received notification from the U.S. Department of Defense that it would not certify the continuation of the ARH program to Congress under...

  • Page 37
    ... completion resulting from supplier delays, as well as the estimated loss resulting from our price commitment on the Lot 5 contract. During 2008, our production efficiencies improved, resulting in $6 million of favorable cost performance. We delivered all remaining Lot 2 aircraft during the year...

  • Page 38
    ... by the 2006 divestiture of non-core product lines of $37 million. Industrial Segment Profit Segment profit in the Industrial segment decreased $106 million in 2008, compared with 2007, mainly due to inï¬,ation in excess of pricing of $61 million, the impact of lower volume and mix of $54 million...

  • Page 39
    ... to Income Taxes Generated by a Leveraged Lease Transaction" in 2007. Finance Segment Profit Segment profit in the Finance segment decreased $272 million in 2008, compared with 2007, primarily due to a $201 million increase in the provision for loan losses, a $51 million impact of higher borrowing...

  • Page 40
    ... are reï¬,ected in the performance statistics provided below. (In millions, except for ratios) 2008 $ 6,915 $ 191 $ 361 $ 234 $ 86 4.72% 68.9% 2.59% 2007...nance assets held for investment for each business, are as follows: (Dollars in millions) 2008 $ 145 83 64 35 - 34 361 9.35% 4.97% 9.29% 1.14%...

  • Page 41
    ... that this amount will be more than sufficient to repay the Finance group's maturing term debt during 2009. Early in the fourth quarter of 2008, in order to reduce our reliance on short term funding, our Board of Directors approved the recommendation of management to downsize the Finance segment...

  • Page 42
    ... were no borrowings outstanding related to the Manufacturing group's $1.25 billion facility or the Finance group's $1.75 billion facility at the end of 2008 or 2007. In February 2009, due to the unavailability of term debt and difficulty in accessing sufficient commercial paper on a daily basis...

  • Page 43
    Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Payments/Receipts Due by Period (In millions) Less than 1 year 1-2 Years 2-3 Years 3-4 Years 4-5 Years More than 5 years Total Payments due: (1) Multi-year credit facilities, loan from Textron and ...

  • Page 44
    ...table summarizes the known contractual obligations, as defined by reporting regulations, of our Manufacturing group as of January 3, 2009... assumptions, which may change with changes in market conditions, our current annual contribution for each of the years from 2010 through 2013 is estimated ...

  • Page 45
    ... continued investment in our working capital. Changes in our working capital components resulted in a $476 million and $101 million use of cash in 2008 and 2007, respectively, and a $123 million source of cash in 2006. A significant use of operating cash is related to increased production levels...

  • Page 46
    ...spending to about $315 million, consistent with our reduced capacity requirements. In 2008 and 2007, we paid $109 million and $1.1 billion, largely related to ... of our common stock from 2006. Our annual dividend increased to $0.92 in 2008 from $0.85 in 2007. Dividend payments to shareholders totaled $284...

  • Page 47
    ... Financial Corporation. We received less cash from financing activities in 2008, primarily due to $663 million in lower proceeds from borrowings,...is transferred between the two borrowing groups, there is no cash transaction reported in the consolidated cash ï¬,ows at the time of the original ...

  • Page 48
    ...to be approximately $380 million. This excludes any cash proceeds related to the final payment to be determined based on the Fluid & Power 2008 operating results. In 2007, cash ï¬,ows from investing activities are primarily related to the realization of cash tax benefits from the Fastening Systems...

  • Page 49
    ...$549 million in 2007 and $50 million 2006, and net pre-tax gains of $36 million, $58 million and $42 million in 2008, 2007 and 2006, respectively. Proceeds from securitizations include amounts received related to the issuance of additional asset-backed notes to investors and exclude amounts received...

  • Page 50
    Textron Inc. Finance receivables are classified as held for sale based on the determination that we no longer intend to hold the receivables for the foreseeable future or until maturity or there is no longer the ability to hold to maturity. Our decision to classify certain finance receivables as ...

  • Page 51
    ... Subsequent to this impairment, we completed our annual impairment test in the fourth quarter of 2008 using the estimates from our long-term strategic...of the fourth quarter, and we believe the carrying value of the reporting unit is recoverable at January 3, 2009. We anticipate volumes to continue ...

  • Page 52
    ...63% in 2007. For our qualified domestic plans, the assumed discount rate was 6.0% in 2008, compared with 5.66% for 2007. A 50-basis-point decrease in this discount rate would result in a $28 million annual increase in pension expense for our qualified domestic plans. The trend in healthcare costs...

  • Page 53
    ... the facts, circumstances and information available at the reporting date. For those tax positions for which it ...ï¬,uctuate significantly on a quarterly and annual basis. Item 7A. Quantitative and Qualitative...did not significantly impact interest expense in 2008, 2007 or 2006. Our Finance group ...

  • Page 54
    ...using discounted cash ï¬,ow analysis and indicative market pricing as reported by leading financial news and data providers. This sensitivity ...dollar and a 10% decrease in the quoted market price of our common stock. 2008 Sensitivity of Fair Value Fair to a 10% Value* Change 2007 Sensitivity of ...

  • Page 55
    ... included in this Annual Report on Form 10-K on the pages indicated below. Page Report of Management Reports of Independent Registered ... to the Consolidated Financial Statements Supplementary Information: Quarterly Data for 2008 and 2007 (Unaudited) Schedule II - Valuation and Qualifying Accounts...

  • Page 56
    ... of Management Management is responsible for the integrity and objectivity of the financial data presented in this Annual Report on Form 10-K. The Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles and include amounts based on...

  • Page 57
    ... with the policies or procedures may deteriorate. In our opinion, Textron Inc. maintained, in all material respects, effective internal control over financial reporting as of January 3, 2009, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company...

  • Page 58
    ... on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2009 expressed an unqualified opinion thereon. As discussed in Note 15 to the Consolidated Financial Statements, in...

  • Page 59
    Consolidated Statements of Operations For each of the years in the three-year period ended January 3, 2009 (In millions, except per share data) 2008 $ 13,523 723 14,246 10,757 1,639 526 432 234 13,588 658 (314) 344 142 $ $ $ $ $ 486 1.40 0.58 1.98 1.38 0.57 1.95 $ $ $ $ $ 2007 $ ...

  • Page 60
    Consolidated Balance Sheets As of January 3, 2009 and December 29, 2007 (Dollars in millions, except share data) 2008 2007 Assets Manufacturing group Cash and cash equivalents Accounts receivable, net Inventories Other current assets Assets of discontinued operations Total current assets $ ...

  • Page 61
    Consolidated Statements of Shareholders' Equity $2.08 Preferred Stock $1.40 Preferred Stock Accumulated Other Comprehensive Loss Total Shareholders' Equity (In millions, except per share data) Common Stock Capital Surplus Retained Earnings Treasury Stock Balance at December 31, 2005 $ 4 Net ...

  • Page 62
    ... it includes dividends from the Finance group as cash ï¬,ow from operating activities as they represent a return on investment. In the fourth quarter of 2008, the Manufacturing group was required to make a cash payment to the Finance group under a support agreement, which we reï¬,ected as a capital...

  • Page 63
    ...) 87 108 308 - 62 1,074 10 1,084 - - - (338) 8 (407) 7 - - (730) 641 (89) (241) - 5 (16) - 173 (761) (244) (18) 31 (1,071) 1 (1,070) 22 (53) 786 $ 733 2008 $ (461) - (461) - - 40 234 489 - (94) - - 18 - (70) - 11 167 - 167 (11,879) 11,245 631 - - (8) - (100) 47 (64) - (64) (649) 133 1,461 (1,574...

  • Page 64
    ...51." As discussed in Note 20, Segment and Geographic Data, we changed our segment structure effective as of the beginning of fiscal 2008 to report five segments: Cessna, Bell, Textron Systems, Industrial and Finance. All prior periods in these Consolidated Financial Statements have been recast to...

  • Page 65
    Notes to the Consolidated Financial Statements using the sales price charged when the same or similar items are sold separately. We recognize revenue when the recognition criteria for each unit of accounting are met. Taxes collected from customers and remitted to government authorities are recorded...

  • Page 66
    Textron Inc. Finance receivables held for sale are carried at the lower of cost or fair value. At the time of transfer to the held for sale classification, we establish a valuation allowance for any shortfall between the carrying value, net of all deferred fees and costs, and fair value. Upon the ...

  • Page 67
    ... discounted cash ï¬,ows. Goodwill We evaluate the recoverability of goodwill annually or more frequently if events or changes in circumstances, such as..., indicate that the carrying value of a reporting unit might be impaired. The reporting unit represents the operating segment unless discrete fi...

  • Page 68
    ...and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities, applying enacted tax rates ...in income tax expense. Recently Announced Accounting Pronouncements In June 2008, the FASB issued Staff Position (FSP) Emerging Issues ...

  • Page 69
    ...note with a face value of $28 million and up to $50 million based on final 2008 operating results that will be determined by the end of the first quarter of 2009, which...The results of the Fluid & Power business were previously reported in the Industrial segment. We generally use a centralized ...

  • Page 70
    ... goodwill at the Finance segment. During the second half of 2008, Kautex was negatively impacted by the significant downturn in the automotive industry which caused deterioration in its revenues and segment profit. Our annual evaluation of goodwill recoverability for Kautex was extended to include...

  • Page 71
    ... of our Manufacturing group reporting units calculated in connection with our annual impairment test. We believe...89 24 13 512 $ $ (103) $ $ $ $ Amortization expense totaled $53 million in 2008, $23 million in 2007 and $7 million in 2006. Amortization expense is estimated to be approximately ...

  • Page 72
    ... and intangible assets acquired, with any excess recorded as goodwill. Approximately $64 million of the goodwill is deductible for tax purposes. In 2008, the goodwill and intangible amounts were adjusted to reï¬,ect the final fair value adjustments, which resulted in a reduction of goodwill of...

  • Page 73
    ... end of 2007. The most significant collateral concentration was in general aviation, which accounted for 26% of managed receivables at the end of 2008 and 22% at the end of 2007. Industry concentrations in the golf and vacation interval industries accounted for 16% and 15%, respectively, of managed...

  • Page 74
    ... 444 256 25 97 17 $ 2012 362 249 170 4 81 (11) 855 $ 2013 358 61 148 5 23 (11) 584 Thereafter $ 970 28 309 1 111 420 2008 $ 2,787 1,208 1,206 647 608 459 6,915 (191) $ 6,724 2007 $ 2,052 2,254 1,240 1,900 613 544 8,603 (89) $ 8,514 Installment contracts Revolving loans Golf course...

  • Page 75
    ..., we classified $1.7 billion of finance receivables as held for sale. These receivables are reï¬,ected at fair value in 2008 and are excluded from the loan impairment disclosures above. The increase in impaired nonaccrual finance receivables primarily reï¬,ects a $71 million account in the Golf...

  • Page 76
    ...2007. Cash ï¬,ows received on these retained interests totaled $126 million in 2008, $71 million in 2007 and $63 million in 2006. Key economic assumptions...sale are as follows: a weighted-average life of four months, expected annual credit loss of 1.0%, residual cash ï¬,ows discount rate of 7.3% and ...

  • Page 77
    ... higher at those respective dates. Inventories related to long-term contracts, net of progress/milestone payments, were $741 million at the end of 2008 and $710 million at the end of 2007. Note 7. Property, Plant and Equipment, net Our Manufacturing group's property, plant and equipment, net are...

  • Page 78
    ... Medium-term notes due 2010 to 2011 (average rate of 9.85%) 6.375% due 2008 4.50% due 2010 6.50% due 2012 3.875% due 2013 5.60% due 2017... paper Other short-term debt Medium-term fixed-rate and variable-rate notes*: Due 2008 (weighted-average rate of 4.58%) Due 2009 (weighted-average rate of 4.07% and...

  • Page 79
    ... were no borrowings outstanding related to the Manufacturing group's $1.25 billion facility or the Finance group's $1.75 billion facility at the end of 2008 or 2007. In February 2009, due to the unavailability of term debt and difficulty in accessing sufficient commercial paper on a daily basis...

  • Page 80
    ... of the cash ï¬,ows on the underlying hedged compensation expense. Fair Values of Derivative Instruments Assets (In millions) Liabilities 2008 2007 2008 2007 Derivatives designated as hedging instruments Fair value hedges Finance group: Interest rate exchange contracts Total fair value hedges...

  • Page 81
    ... not meet hedge accounting criteria and primarily are intended to protect against exposure related to intercompany financing transactions. We reported a loss of $49 million in 2008 and $12 million in 2007 within selling and administrative expenses related to these instruments. Note 10. Fair Values...

  • Page 82
    .... If a decline in the fair value is determined to be other than temporary, we record a corresponding charge to income. During 2008, we recognized impairment charges of $15 million and $6 million related to the Distribution Finance revolving securitization and the Aviation Finance securitization...

  • Page 83
    ... of the $44 million allowance for loan losses attributable to these portfolios. This net adjustment was recorded within special charges in the fourth quarter of 2008. There are no active, quoted market prices for our finance receivables. The estimate of fair value was determined based on the use of...

  • Page 84
    ...at cost. The estimate of fair value was based on observable market inputs for similar securitization interests in markets that are currently inactive. In 2008, approximately 80% of the fair value of term debt for the Finance group was determined based on observable market transactions. The remaining...

  • Page 85
    ... stock, and we can redeem it for $50 per share. At the end of 2008, 2007 and 2006, we had approximately 67,000, 72,000 and 147,000 shares,...stock activity for the three years ended January 3, 2009 is presented below: (In thousands) 2008 250,061 (11,649) 1,147 60 2,422 242,041 2007 251,192 (5,902) ...

  • Page 86
    ...result of the volatility and disruption in the credit markets, and in order to reduce our reliance on short-term funding, on October 13, 2008, our Board of Directors approved the recommendation of management to downsize the Finance segment. The plan approved at that time entailed exiting the Finance...

  • Page 87
    ...the opportunity to voluntarily defer up to 25% of their base salary and up to 100% of annual, long-term incentive and other compensation. Effective January 1, 2008, the maximum deferred for annual, long-term incentive and other compensation decreased to 80%. Elective deferrals may be put into either...

  • Page 88
    ... recognized over the vesting period of the stock options. The weighted-average fair value of options granted per share was $14, $14 and $12 for 2008, 2007 and 2006, respectively. We estimate the fair value of options granted on the date of grant using the Black-Scholes option-pricing model. Expected...

  • Page 89
    ... date fair value of restricted stock units paid in stock that were granted in 2008, 2007 and 2006 was approximately $53, $45 and $41 per share, respectively... 2,506 764 (521) (308) 2,441 $ 37.40 53.09 28.46 40.45 $ 43.83 2008 $ 47 10 10 40 3 $ 2007 38 10 46 42 4 $ 2006 32 13 42 37 1 Subject...

  • Page 90
    ... are not paid or accrued until vested, and is remeasured at each reporting period date. Note 14. Retirement Plans Our defined benefit and de... follows: Pension Benefits (In millions) Postretirement Benefits Other than Pensions 2008 $ 141 302 (404) - 19 19 77 $ 2007 127 271 (369) - 18 40...

  • Page 91
    ... 41 (295) - (59) $ 3,574 $ (1,514) 2007 $ 4,924 127 271 44 - (114) (270) 198 22 - $ 5,202 $ 4,751 347 26 (270) 158 14 $ 5,026 $ (176) $ 2008 714 8 40 (27) 5 (31) (73) - - - 636 636) $ 2007 713 8 39 (5) 4 6 (67) 16 - - 714 714) Change in benefit obligation: Benefit obligation at beginning of...

  • Page 92
    ...initial prescription drug cost trend rate, we have estimated a rate of 10% in 2008, which we assume will decrease to 5% by 2019 and then remain at that ... cost trend rates have a significant effect on the amounts reported for the postretirement benefits other than pensions. A one-percentage...

  • Page 93
    ... 625 33 658 2007 $ 1,106 146 $ 1,252 $ $ 2006 810 147 957 U.S. Non-U.S. Total Income tax expense for continuing operations is summarized as follows: (In millions) 2008 $ 327 16 14 357 $ 2007 333 20 51 404 7 (24) (14) (31) $ 373 $ $ 2006 152 8 36 196 46 28 (6) 68 264 Current: Federal State Non...

  • Page 94
    ...the facts, circumstances and information available at the reporting date. For those tax positions for which it...uctuate significantly on a quarterly and annual basis. We adopted the provisions of ... related to discontinued operations, which were reduced in 2008 primarily due to the Fluid & Power sale. ...

  • Page 95
    ... recognized net tax-related interest expense of approximately $23 million, $11 million and $18 million, respectively, in tax expense. At the end of 2008 and 2007, we had $59 million and $37 million, respectively, of accrued interest included in other liabilities in our balance sheet. The tax effects...

  • Page 96
    ... million of federal deferred tax liabilities were recorded in our balance sheet related to these leases. ARH Program Termination On October 16, 2008, we received notification from the U.S. Department of Defense that it would not certify the continuation of the Armed Reconnaissance Helicopter (ARH...

  • Page 97
    ..., 2007 and 2006, respectively, and discontinued operations expenditures totaled $2 million and $1 million in 2008 and 2006, respectively. Forward Contract We enter into a forward contract in our common stock on an annual basis. The contract is intended to modify the earnings and cash volatility of...

  • Page 98
    ... costs are accrued as the milestones are completed. Based on the milestone progress achieved, we have recorded expense of $17 million in 2008 related to these arrangements. In 2008, 2007 and 2006, we received, or were due to receive, $23 million, $33 million and $41 million, respectively, in cost...

  • Page 99
    ...a result, the maximum potential obligation cannot be determined. During 2008 and 2007, we incurred approximately $2 million and $1 million, ...necessary. Changes in our warranty and product maintenance liability are as follows: (In millions) 2008 $ 315 190 (195) (26) (4) 280 $ 2007 310 189 (178) (15...

  • Page 100
    ... Dividends payable Other Total accrued liabilities $ 2,622 Note 20. Segment and Geographic Data Effective at the beginning of fiscal 2008, we operate in, and report financial information for, the following five business segments: Cessna, Bell, Textron Systems, Industrial and Finance. Prior to...

  • Page 101
    ...for Manufacturing group Income from continuing operations before income taxes Revenues by product type within each segment are summarized below: Revenues (In millions) 2008 $ 5,662 2,827 2,116 1,763 435 720 723 $ 14,246 2007 $ 5,000 2,581 1,334 1,723 426 676 875 $ 12,615 2006 $ 4,156 2,347 1,061...

  • Page 102
    ... by geographic area: Revenues* (In millions) Property, Plant and Equipment, net** 2008 $ 8,821 2,613 442 1,131 754 485 $ 14,246 2007 $ 7,911... 2,373 440 845 623 423 $ 12,615 2006 $ 6,876 1,884 440 621 553 599 $ 10,973 2008 $ 1,728 246 82 18 65 - $ 2,139 2007 $ 1,550 248 78 18 57 - $ 1,951...

  • Page 103
    ...million. (c) Prior period amounts have been restated to reï¬,ect a two-for-one stock split in the third quarter of 2007. (d) For Q4 2008, the diluted earnings per share average shares base excludes potential common shares such as convertible preferred stock, stock options and restricted stock due to...

  • Page 104
    ... - Valuation and Qualifying Accounts (In millions) 2008 2007 2006 Manufacturing Group Allowance for doubtful accounts ... amended (the "Act")) as of the end of the fiscal year covered by this report. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures...

  • Page 105
    ... of Shareholders to be held on April 22, 2009, is incorporated by reference into this Annual Report on Form 10-K. Information regarding our executive officers is contained in Part I of this Annual Report on Form 10-K. Item 11. Executive Compensation The information appearing under "ELECTION OF...

  • Page 106
    ...filed January 29, 1998. Incorporated by reference to Exhibit 3.1 to Textron's Annual Report on Form 10-K for the fiscal year ended January 3, 1998. Amended... by reference to Exhibit 3.1 to Textron's Current Report on Form 8-K filed September 26, 2008. Indenture dated as of December 9, 1999, between...

  • Page 107
    ..., 2007. Form of Restricted Stock Unit Grant Agreement with Dividend Equivalents. Incorporated by reference to Exhibit 10.2 to Textron's Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2008. 4.3D 4.3E 4.3F 4.3G 4.3H 4.4 NOTE: NOTE: 10.1A 10.1B 10.1C 10.1D 10.1E 10.1F 94

  • Page 108
    ...Performance Share Units. Incorporated by reference to Exhibit 10.8B to Textron's Annual Report on Form 10-K for the fiscal year ended December 30, 2006... Appendix A, Prior Plan Provisions (As in effect before January 1, 2008). Survivor Benefit Plan for Textron Key Executives (As amended and ...

  • Page 109
    ...Incorporated by reference to Exhibit 10.5 to Textron's Current Report on Form 8-K filed February 28, 2008. Restricted Stock Awards granted to Lewis B. Campbell on January 1, 2001. Incorporated by reference to Exhibit 10.14D to Textron's Annual Report on Form 10-K for the fiscal year ended December...

  • Page 110
    ... of 2002. Signatures Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on this 26th day of February 2009. TEXTRON INC...

  • Page 111
    Signatures Pursuant to the requirements of the Securities and Exchange Act of 1934, this Annual Report on Form 10-K has been signed below on this 26th day of February 2009, by the following persons on behalf of the registrant and in ...

  • Page 112
    Notes 2008

  • Page 113
    ..., visit our web site at www.textron.com or call (888) TXT-LINE. Textron has included as Exhibits 31.1, 31.2, 32.1 and 32.2 to its Annual Report on Form 10-K for the fiscal year ended January 3, 2009, filed with the Securities and Exchange Commission, certificates of its Chief Executive Officer...

  • Page 114
    Textron Inc. 40 Westminster Street Providence, RI 02903 (401) 421-2800 www.textron.com