E-Z-GO 2003 Annual Report Download - page 68

Rental expense approximated $110 million, $105 million and $101 million in 2003, 2002 and 2001,
respectively. Future minimum rental commitments for noncancelable operating leases in effect at the
end of 2003 approximated $82 million for 2004; $61 million for 2005; $47 million for 2006; $25 million for
2007; $23 million for 2008; and a total of $156 million thereafter.
Textron’s accrued estimated environmental liabilities are based upon currently available facts, existing
technology and presently enacted laws and regulations and are subject to a number of factors and
uncertainties. Circumstances that can affect the reliability and precision of the accruals include the iden-
tification 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. Accrued liabilities relate to disposal costs, U.S. Environmental Protection
Agency oversight costs, legal fees, and operating and maintenance costs for both currently and former-
ly owned or operated facilities. 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. Based upon information currently available, Textron estimates potential environmental liabili-
ties to be in the range of $41 million to $146 million. At the end of 2003, environmental reserves of
approximately $78 million, of which $9 million are classified as current liabilities, have been established
to address these specific estimated potential liabilities. Textron estimates that its accrued environmental
remediation liabilities will likely be paid over the next five to ten years.
Textron Manufacturing’s accrued liabilities are comprised of the following:
December 28,
(In millions) 2002
Customer deposits $ 182 $ 193
Warranty and product maintenance contracts 304 295
Salaries, wages and employer taxes 255 233
Contract reserves 26 130
Other 471 473
Total accrued liabilities $ 1,238 $ 1,324
Textron provides limited warranty and product maintenance programs, including parts and labor, for
certain products for periods ranging from one to five years. Textron estimates the costs that may be
incurred under warranty programs and records a liability in the amount of such costs at the time product
revenue is recognized. Factors that affect this liability include the number of products sold, historical
and anticipated rates of warranty claims and cost per claim. Textron periodically assesses the adequa-
cy of its recorded warranty and product maintenance liabilities and adjusts the amounts as necessary.
Changes in Textron’s warranty and product maintenance liability in 2003 and 2002 are as follows:
December 28,
(In millions) 2002
Accrual at beginning of year $ 251
Provision 165
Settlements (156)
Adjustments to prior accrual estimates 35
Accrual at end of year $ 295
For 2002, the adjustments to prior accrual estimates include $31 million in costs for the recall, inspection
and customer care program at Lycoming described in Note 15.
Company-funded research and development costs include amounts for company-initiated programs,
the cost sharing portions of customer-initiated programs, and losses incurred on customer-initiated pro-
grams. Textron also carries out research and development under contracts with others, primarily the
U.S. Government. A significant portion of company-initiated programs includes independent research
and development related to government products and services that is recoverable through overhead
cost allowances.
66
$295
150
(151)
10
$304