E-Z-GO 2000 Annual Report Download - page 45

Inventories are carried at the lower of cost or market.
December 30, January 1,
(In millions) 2000 2000
Finished goods $ 634 $ 608
Work in process 1,023 970
Raw materials 454 489
2,111 2,067
Less progress payments and customer deposits 240 208
$1,871 $1,859
Inventories aggregating $1,153 million at year-end 2000 and $1,051 million at year-end 1999 were
valued by the last-in, first-out (LIFO) method. (Had such LIFO inventories been valued at current
costs, their carrying values would have been approximately $192 million and $174 million higher at
those respective dates.) The remaining inventories, other than those related to certain long-term
contracts, are valued generally by the first-in, first-out method.
Inventories related to long-term contracts, net of progress payments and customer deposits,
were $161 million at year-end 2000 and $181 million at year-end 1999.
Revenues under fixed-price contracts are generally recorded as deliveries are made. Certain long-term
fixed-price contracts provide for the periodic delivery after a lengthy period of time over which signifi-
cant costs are incurred or require a significant amount of development effort in relation to total contract
volume. Revenues under those contracts and all cost-reimbursement-type contracts are recorded as
costs are incurred. Revenues under the V-22 production contract with the U.S. Government, which
presently is a cost-reimbursement-type contract, are recorded as costs are incurred.
Certain contracts are awarded with fixed-price incentive fees. Incentive fees are considered when
estimating revenues and profit rates, and are recorded when these amounts are reasonably deter-
mined. Long-term contract profits are based on estimates of total sales value and costs at completion.
Such estimates are reviewed and revised periodically throughout the contract life. Revisions to con-
tract profits are recorded when the revisions to estimated sales value or costs are made. Estimated
contract losses are recorded when identified.
Long-term contract receivables at year-end 2000 and 1999 totaled $199 million and $156 million,
respectively. This includes $135 million and $112 million, respectively, of unbilled costs and accrued
profits that had not yet met the contractual billing criteria. Long-term contract receivables do not
include significant amounts (a) billed but unpaid due to contractual retainage provisions or (b) sub-
ject to collection uncertainty.
Investments in marketable securities, a component of other assets, are classified as available-for-
sale and are recorded at their fair value. Unrealized gains and losses on these securities, net of
related income taxes, are included in shareholders’ equity as a component of accumulated other
comprehensive income (loss). Non-marketable equity securities are accounted for under either the
cost or equity method of accounting.
Textron invested in $134 million of e-business securities. In December 2000, the decline in the
fair value of e-business marketable securities below cost was determined to be “other than tempo-
rary” and accordingly, unrealized gross losses of $93 million were recognized in 2000 earnings. The
Company also recorded an impairment write-down of a non-marketable e-business investment of
$24 million. These write-downs have been included in special charges, net on the consolidated
statement of income.
Investment securities included in other assets, had a carrying value of $17 million at year-end
2000 with no unrealized gain or loss in accumulated other comprehensive loss.
Investment Securities6
Long-Term Contracts5
Inventories4
43 TEXTRON 2000 ANNUAL REPORT