E-Z-GO 2005 Annual Report Download - page 48

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Textron Inc.
Other Long-Term Liabilities primarily include undiscounted amounts on the Consolidated Balance Sheet as of December 31, 2005 representing
obligations under deferred compensation arrangements and estimated environmental remediation costs. Payments under deferred compensation
arrangements have been estimated based on management’s assumptions of expected retirement age, mortality, stock price and rates of return on
participant deferrals. Timing of cash flows associated with environmental remediation costs are largely based on historical experience.
Purchase obligations represent undiscounted obligations for which Textron is committed to purchase goods and services as of December 31,
2005. Textron’s ultimate liability for these obligations may be reduced based upon termination provisions included in certain purchase contracts,
the costs incurred to date by vendors under these contracts or by recourse under firm contracts with the U.S. Government under normal termina-
tion clauses.
Effective January 2, 2005, Textron engaged a third-party service provider to assume oversight of its information technology infrastructure, includ-
ing maintenance, operational oversight and purchases of hardware (the “IT Contract”). The IT Contract covers a 10-year period and is subject to
variable pricing and quantity provisions for both purchases of computer hardware and system design modifications. Textron retains the right to
approve significant design, equipment purchase and related decisions by the service provider. Textron has the ability to terminate the IT Contract
prior to its full term and would consequently be subject to variable termination fees that decline over time and do not exceed $63 million in 2006.
In addition to the amounts included above, Textron Manufacturing has contractual obligations related to certain businesses reported as discontin-
ued operations, primarily related to purchase obligations and post-retirement benefit obligations other than pensions. These amounts are esti-
mated to be paid as follows: $54 million in less than one year, $11 million in two years, $1 million in three years, $1 million in four years, $1
million in five years and $27 million in more than five years.
The following table summarizes Textron Finance’s known contractual obligations to make future payments. Due to the nature of finance compa-
nies, Textron Finance also has contractual cash receipts that will be received in the future. Textron Finance generally borrows funds at various
contractual maturities to match the maturities of its finance receivables. The contractual payments and receipts as of December 31, 2005 are
detailed below:
Payments/Receipts Due by Period
Less than More than
(In millions) 1 Year 2 Years 3 Years 4 Years 5 Years 5 Years Total
Textron Finance:
Contractual payments:
Commercial paper and other
short-term debt $ 1,200 $ — $ — $ — $ — $ — $ 1,200
Term debt 1,035 1,088 823 542 557 226 4,271
Operating leases 65531121
Total contractual payments 2,241 1,093 828 545 558 227 5,492
Contractual receipts:
Finance receivables 2,350 1,015 850 584 566 1,398 6,763
Operating leases 24 18 14 12 12 28 108
Total contractual receipts 2,374 1,033 864 596 578 1,426 6,871
Cash 10—————10
Total cash and contractual receipts 2,384 1,033 864 596 578 1,426 6,881
Net cash and contractual receipts
(payments) $ 143 $ (60) $ 36 $ 51 $ 20 $ 1,199 $ 1,389
Cumulative net cash and contractual
receipts $ 143 $ 83 $ 119 $ 170 $ 190 $ 1,389
Finance receivable receipts are based on contractual cash flows. These amounts could differ due to prepayments, charge-offs and other factors.
Contractual receipts and payments exclude finance charges and discounts from receivables, debt interest payments, proceeds from sale of operat-
ing lease equipment and other items.
As shown in the preceding table, cash collections from finance assets are expected to be sufficient to cover maturing debt and other contractual
liabilities. At December 31, 2005, Textron Finance had $2.2 billion in debt and $439 million in Other Liabilities that are payable within the next
12 months.