E-Z-GO 1999 Annual Report Download - page 47

1999 Textron Annual Report 45
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
The financial statements have been prepared in accordance with accounting principles generally
accepted in the United States. Significant accounting policies appear in italics as an integral part
of the notes to the financial statements to which the policies relate.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and short-term, highly liquid securities with original
maturities of ninety days or less.
Revenue Recognition
Revenue is generally recognized when products are delivered or services are performed. With respect
to aircraft, delivery is upon completion of manufacturing, customer acceptance, and the transfer of
risks and rewards of ownership. Specific policies for the Finance segment and long-term contracts are
included in the related notes.
Nature of Operations and Principles of Consolidation
Textron is a global, multi-industry company with manufacturing and finance operations.
Its principal markets (listed within segments in order of the amount of 1999 revenues) and
the major locations of such markets are as follows:
Segment Principal markets Major locations
Aircraft • Business jets • North America
• Commercial and military helicopters • Asia and Australia
• General aviation • South America
• Overnight express package carriers • Western Europe
• Commuter airlines, relief flights, tourism, and freight
Automotive • Automotive original equipment manufacturers and their suppliers • North America
• Western Europe
Industrial • Fastening systems: automotive, electronics, aerospace, • North America
other OEMs, distributors, and consumers • Western Europe
• Golf and turf-care products: golf courses, resort communities, • Asia and Australia
and commercial and industrial users • South America
• Industrial components: commercial aerospace and defense
• Fluid and power systems: original equipment manufacturers,
distributors, and end-users of a wide variety of products
• Light construction equipment: commercial customers,
national rental fleets, and the U.S. Government
Finance • Commercial loans and leases • North America
The consolidated financial statements include the accounts of Textron and all of its
majority- and wholly-owned subsidiaries. All significant intercompany transactions are elimi-
nated. Avco Financial Services is reflected as a discontinued operation for all periods presented.
Textron’s financings are conducted through two borrowing groups, Textron Finance and
Textron Manufacturing. This framework is designed to enhance the Company’s borrowing
power by separating the Finance segment, which is a borrowing unit of a specialized busi-
ness nature. Textron Finance consists of Textron Financial Corporation consolidated with
its subsidiaries, which are the entities through which Textron operates its Finance segment.
Textron Finance finances its operations by borrowing from its own group of external
creditors. Textron Manufacturing is Textron Inc., the parent company, consolidated with
the entities which operate in the Aircraft, Automotive and Industrial business segments.
The preparation of these financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect these statements and accompanying notes. Some of the more significant estimates
include inventory valuation, residual values of leased assets, allowance for losses on
finance receivables, product liability, workers compensation, environmental, and war-
ranty reserves, and amounts reported under long-term contracts. Management’s estimates
are based on the facts and circumstances available at the time estimates are made, past
historical experience, risk of loss, general economic conditions and trends, and manage-
Financial
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