E-Z-GO 2001 Annual Report Download - page 33

Environmental
As w ith other industrial enterprises engaged in similar businesses, Textron is involved in a number of remedial
actions under various federal and state law s and regulations relating to the environment w hich impose
liability on companies to clean up, or contribute to the cost of cleaning up, sites on which their hazardous
wastes or materials w ere disposed or released. Expenditures to evaluate and remediate contaminated
sites approximated $14 million, $11 million and $16 million in 2001, 2000 and 1999, respectively. Textron
currently projects that expenditures for remediation w ill range between $8 million and $15 million for each
of the years 2002 and 2003.
Textron’s accrued estimated environmental liabilities are based on assumptions w hich are subject to a
number of factors and uncertainties. Circumstances w hich 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 remediation, 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 financial position or results of
operation. Textron estimates that its accrued environmental remediation liabilities w ill likely be paid over
the next five to ten years.
Backlog
Textron’s commercial backlog w as $6.5 billion and $8.5 billion at the end of 2001 and 2000, respectively,
and U.S. Government backlog w as $1.0 billion at the end of 2001 and $1.4 billion at the end of 2000.
Backlog for the Aircraft segment w as approximately 85% and 84% of Textron’s commercial backlog at the
end of 2001 and 2000, respectively, and 68% and 74% of Textron’s U.S. Government backlog at the end
of 2001 and 2000, respectively.
Foreign M ilitary Sales
Certain Textron products are sold through the Department of Defense’s Foreign M ilitary Sales Program. In
addition, Textron sells directly to select foreign military organizations. Sales under these programs totaled
approximately 1.2% of Textron’s consolidated revenue in 2001 (0.4% in the case of foreign military sales
and 0.8% in the case of direct sales) and 1.7% in 2000 (1.0% and 0.7% , respectively). Such sales include
military and commercial helicopters, armored vehicles, turrets, and spare parts and in 2001, w ere made
primarily to the countries of Taiw an (32%), El Salvador (21% ), Colombia (13%), Botswana (4% ), Pakistan
(4%), Saudi Arabia (4% ), Canada (3% ) and Germany (3% ). All sales are made in full compliance w ith all
applicable laws and in accordance with Textron’s code of conduct.
New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting
Standards (SFAS) No. 141, “ Business Combinations,” and No. 142, “ Goodwill and Other Intangible
Assets,” effective for fiscal years beginning after December 15, 2001. Under the new rules, goodw ill, along
with intangible assets deemed to have indefinite lives, w ill no longer be amortized but w ill be subject to
annual impairment tests in accordance w ith the Statements. Also, business combinations initiated after
June 30, 2001 must be accounted for using the purchase method of accounting.
Textron will apply the new rules on accounting for goodw ill and other intangible assets beginning in the
first quarter of 2002. Application of the nonamortization provisions of the Statement, excluding Automotive
Trim, w ould have resulted in an increase in net income of $81 million in 2001. During 2002, Textron w ill
perform the first of the required impairment tests of goodw ill and indefinite lived intangible assets as of
December 30, 2001 and has not yet determined w hat the effect of these tests w ill be on Textron’s results
of operations and financial position.
Other M atters
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