E-Z-GO 2012 Annual Report Download - page 27

Textron Inc. Annual Report ● 2012 15
Unanticipated changes in our tax rates or exposure to additional income tax liabilities could affect our profitability.
We are subject to income taxes in both the U.S. and various non-U.S. jurisdictions, and our domestic and international tax
liabilities are subject to the allocation of income among these different jurisdictions. Our effective tax rate 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, changes to unrecognized tax benefits or changes 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, as well as
changes to applicable statutory tax rates. In addition, 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
On December 29, 2012, we operated a total of 61 plants located throughout the U.S. and 50 plants outside the U.S. We own 54
plants and lease the remainder for a total manufacturing space of approximately 20.9 million square feet. We consider the
productive capacity of the plants operated by each of our business segments to be adequate. We also own or lease offices,
warehouses, service centers and other space at various locations. 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.
Item 3. Legal Proceedings
As previously reported in Textron’s Annual Report on Form 10-K for the fiscal year ended January 2, 2010, on August 21, 2009, a
purported class action lawsuit was filed in the United States District Court in Rhode Island by Dianne Leach, an alleged participant
in the Textron Savings Plan. Six additional substantially similar class action lawsuits were subsequently filed by other individuals.
The complaints varyingly name Textron and certain present and former employees, officers and directors as defendants. These
lawsuits alleged that the defendants violated the United States Employee Retirement Income Security Act (ERISA) by imprudently
permitting participants in the Textron Savings Plan to invest in Textron common stock. The complaints sought equitable relief and
unspecified compensatory damages. On February 2, 2010, an amended class action complaint was filed consolidating the seven
previous lawsuits into a single complaint. On March 19, 2010, all defendants moved to dismiss the consolidated amended
complaint, and on September 6, 2011, the Court granted the motion to dismiss in part and denied the motion in part. Specifically,
the Court ruled that plaintiffs failed to plead sufficient allegations to support any claim that defendants made material
misrepresentations that would be actionable under ERISA, but permitted the remainder of the Amended Complaint to survive the
pleadings stage. On September 20, 2011, all defendants moved for partial reconsideration of the Court’s decision not to dismiss the
Amended Complaint. On December 5, 2011, the Court denied the motion for partial reconsideration without rendering a decision
on the merits of the issues raised therein. On December 13, 2012, as a result of a mediation process overseen by an independent
mediator, the parties reached an agreement in principle, subject to settlement documentation and court approval, to settle the
plaintiffs’ claims for an immaterial amount. Because this is a class action, settlements of this type are subject to preliminary and
final review by the Court with an opportunity for class members to respond to the proposed settlement and object if they so desire.
Neither Textron nor any of the other defendants in the settlement admitted any wrongdoing with respect to the allegations in the
case.
As previously reported in Textron’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, on February 7,
2012, a lawsuit was filed in the United States Bankruptcy Court, Northern District of Ohio, Eastern Division (Akron) by Brian A.
Bash, Chapter 7 Trustee for Fair Finance Company against TFC, Fortress Credit Corp. and Fair Facility I, LLC. TFC provided a
revolving line of credit of up to $17.5 million to Fair Finance Company from 2002 through 2007. The complaint alleged numerous
counts against TFC, as Fair Finance Company’s working capital lender, including receipt of fraudulent transfers and assisting in
fraud perpetrated on Fair Finance investors. The Trustee sought avoidance and recovery of alleged fraudulent transfers in the
amount of $316 million, as well as damages of $223 million on the other claims. The Trustee also sought trebled damages on all
claims under Ohio law. TFC moved to dismiss all claims in the complaint, and on November 9, 2012, the court granted TFC’s
motion to dismiss in its entirety and dismissed TFC from the lawsuit.
We also are subject to other actual and threatened legal proceedings and other claims arising out of the conduct of our business.
These proceedings include claims relating to commercial and financial transactions; government contracts; alleged lack of
compliance with applicable laws and regulations; production partners; product liability; patent and trademark infringement;
employment disputes; and environmental, health and safety matters. Some of these legal proceedings seek damages, fines or