E-Z-GO 2002 Annual Report Download - page 35

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 that
impose liability on companies to clean up, or contribute to the cost of cleaning up, sites on which haz-
ardous wastes or materials were disposed or released. Expenditures to evaluate and remediate contam-
inated sites approximated $16 million, $14 million and $11 million in 2002, 2001 and 2000, respectively.
Textron currently projects that expenditures for remediation will range between $12 million and $17 mil-
lion for each of the years 2003 and 2004.
Textron’s accrued estimated environmental liabilities are based on assumptions that are subject to a
number of factors and uncertainties. Circumstances that can affect the accruals’ reliability and precision
include identification of additional sites, environmental regulations, level of cleanup required, technolo-
gies 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 operations. Textron estimates that its accrued environmental remediation liabilities will likely be
paid over the next five to ten years.
Backlog
Textron’s commercial backlog was $6.1 billion and $6.5 billion at the end of 2002 and 2001, respectively,
and U.S. Government backlog was $1.6 billion at the end of 2002 and $1.0 billion at the end of 2001.
Backlog for the Aircraft segment was approximately 85% of Textron’s commercial backlog at the end of
2002 and 2001, and 65% and 68% of Textron’s U.S. Government backlog at the end of 2002 and 2001,
respectively. Included in commercial backlog is approximately $500 million related to firm orders from
CitationShares, Textron’s joint venture with TAG Aviation USA, Inc., discussed in Note 16.
Foreign Military Sales
Certain Textron 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 2.1% of Textron’s consolidated revenue in 2002 (0.1% in the case of foreign mili-
tary sales and 2.0% in the case of direct sales) and 1.2% in 2001 (0.4% and 0.8%, respectively). Such
sales include military and commercial helicopters, armored vehicles, turrets, and spare parts. In 2002,
these sales were made primarily to the countries of Saudi Arabia (20%), United Kingdom (16%), Mexico
(15%) and Venezuela (10%). All sales are made in full compliance with all applicable laws and in accor-
dance with Textron’s Code of Conduct.
New Accounting Pronouncements
In June 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Account-
ing Standards (SFAS) No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This
Statement nullifies EITF No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” and requires com-
panies to recognize costs associated with exit or disposal activities when they are incurred rather than
at the date of a commitment to an exit or disposal plan. The provisions of this Statement are to be
applied prospectively to exit or disposal activities initiated after December 31, 2002. Costs related to
restructuring that were not accruable under EITF No. 94-3, were previously recorded by Textron in seg-
ment profit as incurred. Beginning in 2003, Textron will include all costs related to restructuring, for
which this Statement applies, in special charges. The adoption of this Statement is not expected to have
a material effect on Textron’s results of operations or financial position.
In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (FIN 45). Along
with new disclosure requirements, FIN 45 requires guarantors to recognize, at the inception of certain
guarantees, a liability for the fair value of the obligation undertaken in issuing the guarantee. This differs
from the current practice to record a liability only when a loss is probable and reasonably estimable. The
recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees
issued or modified after December 31, 2002. The adoption of FIN 45 is not expected to have a material
effect on Textron’s results of operations or financial position. Textron has adopted the disclosure provi-
sions as of December 28, 2002.
Other Matters
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