E-Z-GO 2002 Annual Report Download - page 51

December 28, 2002, key economic assumptions used in measuring these retained interests were as
follows:
Small Equipment Vacation Distribution
Aircraft Business Loans and Interval and Finance
(Dollars in millions) Loans Loans Leases Land Loans Loans
Carrying amount of retained
interests in securitizations, net $ 89 $ 58 $ 47 $ 40 $ 89
Weighted-average life (in years) 3.2 1.6 1.8 5.1-5.3 .3
Prepayment speed (annual rate) 22.0% 7.0% 7.0% 15.0-20.0% —
Expected credit losses (annual rate) 0.4% 4.5% 0.2% 0.5-1.5% 0.3%
Residual cash flows discount rate 6.6% 11.5% 7.4% 9.2-10.0% 5.8%
Hypothetical adverse changes of 10% and 20% to either the prepayment speed, expected credit losses
and residual cash flows discount rates assumptions would not have a material impact on the current fair
value of the residual cash flows associated with the retained interests. These hypothetical sensitivities
should be used with caution as the effect of a variation in a particular assumption on the fair value of the
retained interest is calculated without changing any other assumption. In reality, changes in one factor
may result in another that may magnify or counteract the sensitivities losses, such as increases in mar-
ket interest rates may result in lower prepayments and increased credit losses.
December 28, December 29,
(In millions) 2002 2001
Finished goods $ 777 $ 719
Work in process 811 856
Raw materials 209 377
1,797 1,952
Less progress payments and customer deposits 186 225
$1,611 $ 1,727
Inventories aggregating $1.1 billion and $1.0 billion at the end of 2002 and 2001, respectively, were val-
ued by the last-in, first-out (LIFO) method. Had such LIFO inventories been valued at current costs, their
carrying values would have been approximately $228 million and $188 million higher at those respective
dates. The remaining inventories, other than those related to certain long-term contracts, are valued pri-
marily by the first-in, first-out method. Inventories related to long-term contracts, net of progress pay-
ments and customer deposits, were $11 million at the end of 2002 and $105 million at the end of 2001.
Long-term contract receivables at the end of 2002 and 2001 totaled $201 million and $264 million,
respectively. This includes $161 million and $220 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 billed but unpaid due to contractual retainage provisions or 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 well as
ongoing development efforts.
Property, plant and equipment for Textron Manufacturing is comprised of the following:
December 28, December 29,
(In millions) 2002 2001
Land and buildings $ 1,056 $ 1,011
Machinery and equipment 3,113 2,962
4,169 3,973
Less accumulated depreciation 2,188 1,929
$1,981 $ 2,044
Note 6
Long-Term
Assets
Note 5
Long-Term
Contracts
Note 4
Inventories
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