E-Z-GO 1999 Annual Report Download - page 51

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6. The cost of property, plant, and equipment is depreciated based on the assets’ estimated useful lives.
January 1, January 2,
(In millions) 2000 1999
At cost:
Land and buildings $1,083 $ 942
Machinery and equipment 3,499 3,150
4,582 4,092
Less accumulated depreciation 2,069 1,887
$2,513 $2,205
Goodwill is amortized on the straight-line method over 20 to 40 years. Accumulated
amortization of goodwill totaled $463 million at January 1, 2000 and $388 million at
January 2, 1999.
Goodwill is periodically reviewed for impairment by comparing the carrying amount to the
estimated future undiscounted cash flows of the businesses acquired. If this review indicates
that goodwill is not recoverable, the carrying amount would be reduced to fair value.
Customer engineering and tooling project costs for which customer reimbursement is
anticipated are capitalized and classified in other assets. Effective January 2, 2000, Textron
adopted Emerging Issues Task Force Issue 99-5 “Accounting for Pre-production Costs related
to Long-Term Supply Agreements.” This consensus requires that all design and development
costs for products sold under long-term supply arrangements be expensed unless there is a
contractual guarantee that provides for specific required payments for these costs. Textron
will report a Cumulative Effect of Change in Accounting Principle of $59 million (net of
tax), or approximately $0.39 per diluted share in the first quarter of 2000 related to the
adoption of this consensus.
7. At the end of 1999 and 1998, debt consisted of the following:
January 1, January 2,
(In millions) 2000 1999
Textron Manufacturing:
Short-term debt:
Borrowings under or supported by long-term credit facilities* $ 626 $1,671
Current portion of long-term debt 62 64
Total short-term debt 688 1,735
Long-term senior debt:
Medium-term notes due 2000-2011 (average rate – 9.71%) 63 230
6.375% due 2004 300 –
6.75% due 2002 500 –
8.75% due 2022 36 200
6.63% due 2007 32 200
Other long-term debt (average rate – 7.36%) 210 314
1,141 944
Current portion of long-term debt (62) (64)
Total long-term debt 1,079 880
Total Textron Manufacturing debt $1,767 $2,615
*The weighted average interest rates on these borrowings, before the effect of interest rate exchange agreements, were 5.8%, 5.8%,
and 4.8% at year-end 1999, 1998, and 1997, respectively. Comparable rates during the years 1999, 1998, and 1997 were 4.9%,
5.4%, and 4.8%, respectively.
Textron Manufacturing maintains credit facilities with various banks for both short- and
long-term borrowings. At year-end, Textron Manufacturing had (a) a $1.0 billion domestic
credit agreement with 24 banks available on a fully revolving basis until April 1, 2003,
(b) $105 million in multi-currency credit agreements with three banks available through
December 29, 2002, and (c) $241 million in other credit facilities available with various
banks. At year-end 1999, $797 million of the credit facilities was not used or reserved as
support for commercial paper or bank borrowings.
Debt and Credit
Facilities
Long-Term
Assets
1999 Textron Annual Report 49