E-Z-GO 2005 Annual Report Download - page 94

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74
Changes in Textron’s warranty and product maintenance liability are as follows:
(In millions)
2005 2004 2003
Accrual at beginning of year $ 280 $ 302 $ 295
Provision 188 146 149
Settlements (149) (151) (151)
Adjustments to prior accrual estimates (1) (17) 9
Accrual at end of year $ 318 $ 280 $ 302
Research and Development Costs
Company-funded and customer-funded research and development costs are as follows:
(In millions)
2005 2004 2003
Company-funded $ 326 $ 291 $ 241
Customer-funded 366 283 332
Total research and development $ 692 $ 574 $ 573
In 2005, $78 million in cost reimbursements of company-funded amounts were received or due from risk-sharing partners, resulting in net
company-funded costs of $248 million. See Note 17 for additional information concerning these risk-sharing arrangements.
Customer-funded research and development costs are primarily related to U.S. Government contracts, including the V-22 and H-1 development
contracts.
Note 21. Segment Reporting and Geographic Data
Textron has four reportable segments: Bell, Cessna, Industrial and Finance. See Note 1 for the principal markets, 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 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 disposi-
tion of significant business units. Textron Finance includes interest income and expense and excludes special charges and, in 2003, included dis-
tributions on preferred securities of the Finance subsidiary trust, as part of segment profit. Provisions for losses on finance receivables involving
the sale or lease of Textron products are recorded by the selling manufacturing division when Textron Finance has recourse to Textron Manufac-
turing.
Revenues Segment Profit
(In millions)
2005 2004 2003 2005 2004 2003
Bell $ 2,881 $ 2,254 $ 2,348 $ 368 $ 250 $ 234
Cessna 3,480 2,473 2,299 457 267 199
Industrial 3,054 3,046 2,836 150 194 150
Finance 628 545 572 171 139 122
$10,043 $ 8,318 $ 8,055 1,146 850 705
Special charges (118) (59) (77)
Segment operating income 1,028 791 628
Gain on sale of businesses — — 15
Corporate expenses and other, net (199) (157) (123)
Interest expense, net (90) (94) (96)
Income from continuing operations
before income taxes and distributions
on preferred securities of subsidiary trusts $ 739 $ 540 $ 424
Textron Inc.