E-Z-GO 2001 Annual Report Download - page 48

to decrease the cost of sales by approximately $16 million and to increase net income by approximately
$10 million. The remaining inventories, other than those related to certain long-term contracts, are valued
primarily by the first-in, first-out method. Inventories related to long-term contracts, net of progress
payments and customer deposits, were $105 million at year-end 2001 and $161 million at year-end 2000.
Long-term contract receivables at year-end 2001 and 2000 totaled $264 million and $199 million, respectively.
This includes $220 million and $135 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) subject to collection uncertainty. During the
second half of 2001, program reviews on certain long-term development and production contracts
indicated reduced profitability expectations resulting in a $124 million charge to earnings. The reduced
profitability expectations reflected the clarification of several matters including extended development
schedules and planned design changes on a number of programs, as w ell as ongoing development efforts.
Property, plant and equipment for Textron Manufacturing at year-end 2001 and 2000 consisted of the follow ing:
December 29),December 30),
(In millions) 2001 2000
Land and buildings $1,011 $1,166
Machinery and equipment 2,962 3,666
3,973 4,832
Less accumulated depreciation 1,929 2,264
$2,044 $2,568
Prior to 2000, customer engineering and tooling project costs for which customer reimbursement w as
anticipated, w ere capitalized and classified in other assets. In 2000, Textron adopted the EITF consensus,
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 cumulative effect of a change in accounting principle of $59
million, net of tax, 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 No. 99-5 had been applied during the year ended 1999 w ere:
(In millions, except per share data) As Reported Pro Forma
Income from continuing operations $ 623 $ 612
Income from continuing operations per diluted share $ 4.05 $ 3.98
Net income $2,226 $2,215
Net income per diluted share $14.48 $14.41
Debt at year-end 2001 and 2000 consisted of the following:
December 29),December 30),
(In millions) 2001 2000
Textron Manufacturing:
Short-term debt:
Borrowings under or supported by long-term credit facilities*$146 $528
Current portion of long-term debt 527 87
Total short-term debt 673 615
Long-term senior debt:
Medium term notes due 2010-2011 (average rate – 9.85% ) 16 43
6.750% due 2002 500 500
6.375% due 2004 300 300
5.625% due 2005 270 273
6.375% due 2008 300 –
6.625% due 2020 217 221
Other long-term debt (average rate – 6.77% ) 185 219
1,788 1,556
Current portion of long-term debt (527) (87)
Total long-term debt 1,261 1,469
Total Textron M anufacturing debt $1,934 $2,084
*The w eighted average interest rates on these borrowings, before the effect of interest rate exchange agreements, were 3.2% , 5.6%
and 5.8% at year-end 2001, 2000 and 1999, respectively. Comparable rates during the years 2001, 2000 and 1999 w ere 4.3% , 5.7% and
4.9% , respectively.
7. Debt and Credit
Facilities
6. Long-Term
Assets
5. Long-Term
Contracts
46 Textron Annual Report