E-Z-GO 2008 Annual Report Download - page 86

Download and view the complete annual report

Please find page 86 of the 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

Textron Inc.
Accumulated Other Comprehensive Loss
The after-tax components of accumulated other comprehensive loss are presented below:
Pension and Deferred
Currency Postretirement Gains (Losses)
Translation Benefits on Hedge
(In millions) Adjustment Adjustments Contracts Total
Balance at December 31, 2005 $ 127 $ (229) $ 24 $ (78)
Transition adjustment due to change in accounting — (647) — (647)
Other comprehensive income (loss) 45 58 (5) 98
Reclassification due to sale of Fastening Systems (47) 39 — (8)
Reclassification adjustment — — (9) (9)
Balance at December 30, 2006 125 (779) 10 (644)
Other comprehensive income 57 96 53 206
Reclassification adjustment — 58 (20) 38
Balance at December 29, 2007 182 (625) 43 (400)
Other comprehensive loss (195) (803) (73) (1,071)
Reclassification due to sale of Fluid & Power 2 33 — 35
Reclassification adjustment — 31 (17) 14
Balance at January 3, 2009 $ (11) $ (1,364) $ (47) $ (1,422)
Note 12. Special Charges
Special charges for the year ended January 3, 2009 include an initial mark-to-market adjustment of $293 million that was made when we
classified certain finance receivables from held for investment to held for sale, a goodwill impairment charge in the Finance segment of
$169 million and restructuring charges of $64 million. There were no special charges in fiscal 2007 or 2006.
As a 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 group’s Asset-Based Lending and Structured Capital businesses, as well as several additional product lines, and limiting new
originations in the Distribution Finance, Golf Finance and Resort Finance businesses. On December 22, 2008, our Board of Directors approved a
plan to exit all of the commercial finance business of the Finance segment, other than that portion of the business supporting customer purchases
of Textron-manufactured products. We made the decision to exit this business due to continued weakness in the economy and in order to address
our long-term liquidity position in light of continuing disruption and instability in the capital markets. In total, these actions will impact
approximately $7.3 billion of the Finance segment’s $10.8 billion managed receivable portfolio as of the end of 2008. The exit plan will be effected
through a combination of orderly liquidation and selected sales and is expected to be substantially complete over the next two to four years. We
recorded a pre-tax mark-to-market adjustment of $293 million against owned receivables held for sale due to the exit plan. At January 3, 2009,
approximately $2.9 billion of the liquidating receivables were designated for sale or transfer, of which about $1.2 billion represent securitized
receivables managed by the Finance segment, and $1.7 billion represent owned receivables classified as held for sale.
Based on current market conditions and the plan to downsize the Finance segment, we recorded a $169 million pre-tax impairment charge in the
fourth quarter of 2008 to eliminate all goodwill at the Finance segment.
In October 2008, we initiated a restructuring program to reduce overhead cost and improve productivity across the company. On December 22,
2008, the Textron Board of Directors approved an expansion of this previously announced plan, which includes corporate and segment direct and
indirect workforce reductions and streamlining of administrative overhead. The program, along with other volume-related reductions in workforce
during the fourth quarter of 2008 and in January 2009, eliminates approximately 6,300 positions worldwide, representing approximately 15% of
our global workforce.
We recorded pre-tax restructuring costs of $64 million in the fourth quarter of 2008 related to this restructuring program and the Finance segment
exit plan, excluding volume-related direct labor reductions, which are recorded in segment profit. In the first half of 2009, we estimate that we will
incur an additional $40 million in pre-tax restructuring costs, largely related to workforce reductions at Cessna. We may have additional
restructuring costs as a result of further headcount reductions and other actions; however, an estimate of additional charges cannot be made at
this time.
73