E-Z-GO 2004 Annual Report Download - page 88

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Warranty and Product Maintenance Contracts
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 adequacy of its
recorded warranty and product maintenance liabilities and adjusts the amounts as necessary.
Changes in Textron’s warranty and product maintenance liability are as follows:
(In millions)
2004 2003 2002
Accrual at beginning of year $ 304 $ 295 $ 251
Provision 147 150 165
Settlements (152) (151) (156)
Adjustments to prior accrual estimates (17) 10 35
Accrual at end of year $ 282 $ 304 $ 295
For 2002, the adjustments to prior accrual estimates include $31 million in costs for the recall, inspection and customer care pro-
gram at Lycoming described in Note 15.
Research and Development Costs
Company-funded and customer-funded research and development costs are as follows:
(In millions)
2004 2003 2002
Company-funded $ 307 $ 255 $ 204
Customer-funded 283 332 379
Total research and development $ 590 $ 587 $ 583
Customer-funded research and development costs are primarily related to U.S. Government contracts, including the V-22 and H-1
development contracts.
Note 18 Segment Reporting and Geographic Data
Textron has five reportable segments: Bell, Cessna, Fastening Systems, Industrial and Finance. See Note 1 for the principal mar-
kets, and Item 1. Business of Textron on pages 1 through 5 for products, of the segments.
Textron’s reportable segments are strategically aligned based on the manner in which Textron manages its various operations. The
accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1.
Textron evaluates segment performance based on segment profit. Segment profit for Textron Manufacturing excludes interest
expense, certain corporate expenses, special charges, and gains and losses from the disposition of significant business units. Tex-
tron Finance includes interest income, interest expense and distributions on preferred securities of Finance subsidiary trust, and
excludes special charges as part of segment profit. Provisions for losses on finance receivables involving the sale or lease of Tex-
tron products are recorded by the selling manufacturing division.
67
Textron Inc.