E-Z-GO 2000 Annual Report Download - page 46

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The cost of property, plant, and equipment is depreciated based on the assets’ estimated useful
lives. Expenditures for improvements that increase asset values and extend useful lives are capital-
ized. Expenditures for maintenance and repairs are expensed as incurred.
December 30, January 1,
(In millions) 2000 2000
At cost:
Land and buildings $1,170 $1,083
Machinery and equipment 3,729 3,499
4,899 4,582
Less accumulated depreciation 2,294 2,069
$2,605 $2,513
Intangible assets are principally comprised of goodwill which is amortized on the straight-line
method over 20 to 40 years. Other intangible assets are amortized over their estimated useful lives.
Accumulated amortization of intangible assets totaled $564 million at December 30, 2000 and
$463 million at January 1, 2000.
Goodwill is periodically reviewed for impairment by comparing the carrying amount to the esti-
mated 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. In addition, the
Company assesses long-lived assets, including associated goodwill, for impairment under Financial
Accounting Standards Board’s (FASB) Statement No. 121, “Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of.”
During 2000, Textron recorded a write-down of goodwill and certain other long-lived assets of
$350 million as further discussed in Note 17.
Prior to fiscal year 2000, customer engineering and tooling project costs for which customer
reimbursement was anticipated were capitalized and classified in other assets. Effective January 2,
2000, Textron adopted EITF Issue No. 99-5 “Accounting for Pre-Production Costs Related to Long-
Term Supply Arrangements”. 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 reported a cumula-
tive effect of change in accounting principle of $59 million (net of tax), or approximately $0.41 per
diluted share in the first quarter of 2000 related to the adoption of this consensus.
Pro forma income from continuing operations, net income and related diluted earnings per
common share amounts as if the provisions of EITF 99-5 had been applied during the year ended
1999 and 1998 are as follows:
(In millions, except per share data) 1999 1998
Income from continuing operations
As reported $ 623 $ 443
Pro forma $ 612 $ 430
Income from continuing operations per diluted share
As reported $ 4.05 $2.68
Pro forma $ 3.98 $2.60
Net income
As reported $2,226 $ 608
Pro forma $2,215 $ 595
Net income per diluted share
As reported $14.48 $3.68
Pro forma $14.41 $3.60
Long-Term Assets7
TEXTRON 2000 ANNUAL REPORT 44