E-Z-GO 2005 Annual Report Download - page 91

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During 2005, Bell Helicopter entered into four separate risk-sharing arrangements. Two of the arrangements are with commercial participants in
the development of the Bell Model 429 aircraft. The arrangements require contributions from the participants totaling $20 million, which are due
once the development effort reaches certain predetermined milestones, as well as in-kind development contributions from one participant. The
other two arrangements are with Canadian governmental organizations. These arrangements, which currently include the Model 429 aircraft and
may potentially include certain future aircraft, each require cash contributions of up to CAD 115 million from the participants, based on a percent-
age of qualifying research and development costs incurred.
Each of the participants under these arrangements is entitled to payments from Bell Helicopter, with the commercial participants also entitled to
discounts, based on future sales of the Model 429 aircraft. In addition, there are certain requirements related to production of future Model 429
aircraft in Canada, and one of the commercial participants is entitled to perform certain manufacturing functions for the Model 429 aircraft. Based
on the development activities completed and costs incurred in the current and prior periods through December 31, 2005, $35 million has been
recorded in income related to these arrangements.
Environmental Remediation
As with other industrial enterprises engaged in similar businesses, Textron is involved in a number of remedial actions under various federal and
state laws and regulations relating to the environment that impose liability on companies to clean up, or contribute to the cost of cleaning up, sites
on which hazardous wastes or materials were disposed or released. Expenditures to evaluate and remediate contaminated sites approximated $6
million in each of the three years ended December 31, 2005.
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. Accrued liabilities relate to disposal costs, U.S. Environmental Protection
Agency oversight costs, legal fees, and operating and maintenance costs for both currently and formerly owned or operated facilities. Circum-
stances that can affect the reliability and precision of the accruals include the identification 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. Textron believes that any changes to the accruals that may result from these factors and uncertainties will not have a mate-
rial effect on Textron’s financial position or results of operations. Based upon information currently available, Textron estimates potential environ-
mental liabilities to be in the range of $44 million to $143 million. At the end of 2005, environmental reserves of approximately $66 million, of
which $12 million are classified as current liabilities, have been established to address these specific estimated potential liabilities. Textron esti-
mates that its accrued environmental remediation liabilities will likely be paid over the next five to ten years.
Note 18. Arrangements with Off-Balance Sheet Risk
Textron enters into arrangements with off-balance sheet risk in the normal course of business, as discussed below.
Guarantees
Textron has joint venture agreements with external financing arrangements for which Textron has guaranteed approximately $15 million in debt
obligations, including approximately $5 million related to discontinued operations. Textron would be required to make payments under these
guarantees if a joint venture defaults under the debt agreements.
Bell Helicopter and AgustaWestland North America Inc. (“AWNA”) formed the AgustaWestlandBell LLC (“AWB LLC”) in January 2004 for the joint
design, development, manufacture, sale, customer training and product support of the US101 helicopter, recently designated the VH-71
helicopter, and certain variations and derivatives thereof, to be offered and sold to departments or agencies of the U.S. Government.
In March 2005, AWB LLC received a $1.2 billion cost reimbursement-type subcontract from Lockheed Martin for the System Development and
Demonstration phase of the U.S. Marine Corps Marine 1 Helicopter Squadron (VH-71) Program. On March 11, 2005, Bell Helicopter guaranteed
to Lockheed Martin the due and prompt performance by AWB LLC of all its obligations under this subcontract, provided that Bell Helicopter’s lia-
bility under the guaranty shall not exceed 49% of AWB LLC’s aggregate liability to Lockheed Martin under the subcontract. AgustaWestland N.V.,
AWNA’s parent company, has guaranteed the remaining 51% to Lockheed Martin. Bell Helicopter and AgustaWestland N.V. have entered into
cross-indemnification agreements in which each party indemnifies the other related to any payments required under these agreements that result
from the indemnifying party’s workshare under any subcontracts received.
Notes to the Consolidated Financial Statements