E-Z-GO 2000 Annual Report Download - page 33

Environmental
As with other industrial enterprises engaged in similar businesses, Textron is involved in a number
of remedial actions under various federal and state laws and regulations relating to the environment
which impose liability on companies to clean up, or contribute to the cost of cleaning up, sites on
which their hazardous wastes or materials were disposed or released. Expenditures to evaluate and
remediate contaminated sites approximated $11 million, $16 million and $10 million in 2000, 1999
and 1998, respectively. Textron currently projects that expenditures for remediation will range
between $12 million and $15 million for each of the years 2001 and 2002.
Textron’s accrued estimated environmental liabilities are based on assumptions which are subject
to a number of factors and uncertainties. Circumstances which can affect the accruals’ reliability
and precision include identification of additional sites, environmental regulations, level of cleanup
required, technologies available, number and financial condition of other contributors to remedia-
tion, and the time period over which remediation may occur. Textron believes that any changes to
the accruals that may result from these factors and uncertainties will not have a material effect on
Textron’s net income or financial condition. Textron estimates that its accrued environmental reme-
diation liabilities will likely be paid over the next five to ten years.
Backlog
Textron’s commercial backlog was $8.5 billion and $7.2 billion at the end of 2000 and 1999, respec-
tively, and U.S. Government backlog was $1.4 billion at the end of 2000 and $2.0 billion at the end
of 1999. Backlog for the Aircraft segment was approximately 84% and 81% of Textron’s commercial
backlog at the end of 2000 and 1999, respectively, and 74% and 80% of Textron’s U.S. Government
backlog at the end of 2000 and 1999, respectively.
Foreign Military Sales
Certain Company products are sold through the Department of Defense’s Foreign Military Sales
Program. In addition, Textron sells directly to select foreign military organizations. Sales under these
programs totaled approximately 1.7% of Textron’s consolidated revenue in 2000 (1.0% in the case
of foreign military sales and 0.7% in the case of direct sales) and 1.8% in 1999 (0.6% and 1.2%,
respectively). Such sales include military and commercial helicopters, armored vehicles, turrets,
and spare parts and in 2000 were made primarily to the countries of Taiwan (54%), Colombia (11%),
Sri Lanka (6%), Japan (5%), Finland (3%), Italy (3%) and Korea (3%). All sales are made in full com-
pliance with all applicable laws and in accordance with Textron’s code of conduct.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 133 “Accounting for Derivative Instruments and Hedging Activities.”
SFAS 133 requires an entity to recognize all derivatives as either assets or liabilities and measure
those instruments at fair value. In June 1999, the FASB issued SFAS 137, which deferred the effective
date of SFAS 133 to all fiscal quarters of years beginning after June 15, 2000. In June 2000, the FASB
issued SFAS 138 which amended accounting and reporting standards and addressed issues causing
implementation difficulties with SFAS 133 for certain derivative instruments and hedging activities.
These statements became effective for the Company on December 31, 2000. The Company will
record the effect of the transition to these new accounting requirements in the first quarter of 2001
as a cumulative effect of change in accounting principle. The effect of this change in accounting will
not be material to the Company’s results of operations and financial position.
Effective October 1, 2000, the Company adopted Staff Accounting Bulletin (SAB) 101, “Revenue
Recognition in Financial Statements”. SAB 101 summarizes the Securities and Exchange
Commission’s views regarding the application of generally accepted accounting principles to
selected revenue recognition issues. The adoption and implementation of SAB 101 did not have a
material effect on the results of operations or financial position of the Company.
Other Matters
31 TEXTRON 2000 ANNUAL REPORT