E-Z-GO 2010 Annual Report Download - page 63

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income taxes payable on taxable income in future years. We evaluate the recoverability of these future tax deductions and credits by
assessing the adequacy of future expected taxable income from all sources, including the future reversal of existing taxable temporary
differences, taxable income in carryback years, available tax planning strategies and estimated future taxable income. We recognize
net tax-related interest and penalties for continuing operations in income tax expense.
Note 2. Discontinued Operations
On April 3, 2009, we sold HR Textron, an operating unit previously reported within the Textron Systems segment. We recorded an
after-tax gain of $8 million and net cash proceeds of approximately $376 million in 2009 in connection with this sale. In the fourth
quarter of 2008, we completed the sale of the Fluid & Power business unit, previously reported in the Industrial segment, and recorded
an after-tax gain of $111 million. We received net cash proceeds of approximately $479 million and a six-year note with a face value
of $28 million in connection with this sale in 2008. Upon final settlement in 2009, we also recorded a five-year note with a face value
of $30 million. Both of the notes received from this sale are recorded in the Consolidated Balance Sheet net of a valuation allowance.
The HR Textron and Fluid & Power businesses met the discontinued operations criteria and are included in discontinued operations
for all periods presented in our Consolidated Financial Statements.
Earnings for the businesses classified within discontinued operations were as follows:
(In millions) 2010 2009 2008
Revenues
$ —
$ 48
$ 796
Income (loss) from discontinued operations before income taxes
(6)
(2)
63
Income tax expense (benefit)
—
(38)
12
Operating income (loss) from discontinued operations, net of
income taxes
(6)
36
51
Net gain on disposals, net of income taxes
—
6
111
Income (loss) from discontinued operations, net of income taxes
$ (6)
$ 42
$ 162
We generally use a centralized approach to the cash management and financing of our manufacturing operations and, accordingly, do
not allocate debt or interest expense to our discontinued businesses. Any debt and related interest expense of a specific entity within a
business is recorded by the respective entity. General corporate overhead previously allocated to the businesses for reporting purposes
is excluded from amounts reported as discontinued operations.
Note 3. Goodwill and Intangible Assets
Goodwill
The changes in the carrying amount of goodwill, by segment, are as follows:
(In millions)
Cessna
Bell
Textron
Systems
Industrial
Finance
Total
Balance at December 29, 2007
$ 322
$ 18
$ 1,151
$ 392
$ 169
$ 2,052
Acquisitions and purchase price adjustments
—
(5)
(44)
—
—
(49)
Adjustment related to business sold
—
—
(134)
—
—
(134)
Transfers
—
17
(17)
—
—
—
Impairment
—
—
—
—
(169)
(169)
Foreign currency translation
—
—
—
(2)
—
(2)
Balance at January 3, 2009
322
30
956
390
—
1,698
Impairment
—
—
—
(80)
—
(80)
Foreign currency translation
—
—
—
2
—
2
Other
—
—
2
—
—
2
Balance at January 2, 2010
322
30
958
312
—
1,622
Acquisitions
—
1
16
5
—
22
Foreign currency translation
—
—
—
(12)
—
(12)
Balance at January 1, 2011
$ 322
$ 31
$ 974
$ 305
$ —
$ 1,632
In 2010, we acquired four companies in the Bell, Textron Systems and Industrial segments for aggregate proceeds of $57 million and
recorded $22 million in goodwill and $14 million in intangible assets. In 2009, we recorded an $80 million impairment charge in the
Industrial segment’s Golf & Turf Care reporting unit based on lower forecasted revenues and profits related to the effects of the
economic recession. In 2008, we recorded a $169 million impairment charge to eliminate all of the Finance segment’s goodwill based
on prevailing market conditions and the plan to downsize the segment.