E-Z-GO 2005 Annual Report Download - page 26

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Textron Inc.
Backlog
U.S. Government backlog was $3.3 billion at the end of 2005 and 2004, including backlog at Bell Helicopter of $2.2 billion in 2005 and $2.5 bil-
lion in 2004. Approximately 98% of the 2005 backlog was funded at December 31, 2005. Unfunded backlog represents the award value of U.S.
Government contracts received, generally related to cost-plus type contracts, in excess of the funding formally appropriated by the U.S. Govern-
ment. The U.S. Government is obligated only up to the funded amount of the contract. Additional funding is appropriated as the contract
progresses.
Commercial backlog from unaffiliated customers was $7.4 billion and $6.3 billion in 2005 and 2004, respectively, including backlog at Cessna of
$6.3 billion in 2005 and $5.3 billion in 2004. A significant portion of Cessna’s backlog represents orders from a major fractional jet customer.
Orders from this fractional aircraft operator are included in backlog when the customer enters into a definitive master agreement and has estab-
lished preliminary delivery dates for the aircraft. Preliminary delivery dates are subject to change through amendment to the master agreement.
Final delivery dates are established approximately 12 to 18 months prior to delivery. Orders from other customers are included in backlog upon
the customer entering into a definitive purchase order and receipt of required deposits.
The 2005 year-end backlog with the major fractional jet customer was approximately $1.5 billion. The remaining $4.8 billion of Cessna’s backlog
at the end of 2005 is with other commercial customers covering a wide spectrum of industries. This backlog includes $0.6 billion in orders for the
new Mustang aircraft with the first customer deliveries in 2007.
Approximately 45% of our total backlog of $10.7 billion at December 31, 2005 represents orders which are not expected to be filled within our
2006 fiscal year.
U.S. Government Contracts
In 2005, 18% of our consolidated revenues were generated by or resulted from contracts with the U.S. Government. This business is subject to
competition, changes in procurement policies and regulations, the continuing availability of Congressional appropriations, world events, and the
size and timing of programs in which we may participate.
Our contracts with the U.S. Government generally may be terminated by the U.S. Government for convenience or default in whole or in part. If the
U.S. Government terminates a contract for convenience, we normally will be entitled to payment for the cost of contract work performed before the
effective date of termination plus reasonable profit on such work, adjusted to reflect any rate of loss had the contract been completed, plus reason-
able costs of settlement of the work terminated. If, however, the U.S. Government terminates a contract for default, generally: (a) we will be paid the
contract price for completed supplies delivered and accepted, an agreed-upon amount for manufacturing materials delivered and accepted and for
the protection and preservation of property, and for partially completed products accepted by the U.S. Government; (b) the U.S. Government will
not be liable for our costs with respect to unaccepted items and will be entitled to repayment of advance payments and progress payments related
to the terminated portions of the contract; and (c) we may be liable for excess costs incurred by the U.S. Government in procuring undelivered
items from another source.
Research and Development
Information regarding our research and development expenditures is contained in Note 20 to the Consolidated Financial Statements on page 74
of this Annual Report on Form 10-K.
Patents and Trademarks
We own, or are licensed under, numerous patents throughout the world relating to products, services and methods of manufacturing. Patents have
been of value in the past and are expected to be of value in the future. However, the loss of any single patent or group of patents would not, in our
opinion, materially affect the conduct of our business. We also own or license trademarks, trade names and service marks that are important to
our business. Some of these trademarks, trade names and service marks are used in this Annual Report on Form 10-K and other reports, includ-
ing: 429; AB Benzlers; AH-1Z; APCO; BA609; Bell/Agusta Aerospace Company, LLC (BAAC); Bell Helicopter; Bob-Cat; Boesner; Brouwer;
Bunton; Cadillac Gage; Caravan 675; Cessna; Cessna Aircraft Company; Cessna Caravan; Citation; Citation Bravo; Citation CJ1; Citation CJ1+;
Citation CJ2; Citation CJ2+; Citation CJ3; Citation Encore; Citation Encore+; Citation Mustang; CitationShares; Citation Sovereign; Citation X;
Citation XLS; Cone Drive; Cushman; David Brown; David Brown Guinard Pump; David Brown Hydraulics; David Brown Union Pump; E-Z-GO;
Fairmont; Gear Technologies; 429 Global Ranger; Global Technology Center; Grand Caravan; Greenlee; H-1; HR Textron; Hydraulics; Hydreco;
Hydrocarbon Processing Products; Huey II; Intevia; Jacobsen; Kautex; Keylex; Kiowa Warrior; Klauke Progressive; 429 Light Twin; Lycoming;
Maag; Modular Affordable Product Lines (MAPL); Polymer Systems; Powauto; Power Advantage Plus; ProParts Solution; Quick Draw Loan;
Radicon; Ransomes; Rothenberger LLC; Ryan; Sensor Fuzed Weapon; 172 Skyhawk; 172 Skyhawk SP; 182 Skylane; ST 4X4; Small Business
Direct; 206 Stationair; Steiner; Super Cargomaster; T206 Turbo Stationair; Tempo; Textron; Textron Business Systems; Textron Fastening Sys-