E-Z-GO 2007 Annual Report Download - page 26

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Textron Inc.
The commercial fi nance environment in which Textron Financial Corporation operates is highly fragmented and extremely competitive. Textron
Financial Corporation is subject to competition from various types of fi nancing institutions, including banks, leasing companies, insurance
companies, commercial fi nance companies and fi nance operations of equipment vendors. Competition within the commercial fi nance industry
is primarily focused on price, term, structure and service.
Textron Financial Corporation’s largest business risk is the collectibility of its fi nance receivable portfolio. See “Finance Portfolio Quality” in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 23 for a detailed discussion of the credit
quality of this portfolio.
Backlog
Our backlog at the end of 2007 and 2006 is summarized below:
December 29, December 30,
(In millions) 2007 2006
U.S. Government:
Bell Helicopter $ 2,805 $ 2,363
Textron Systems 2,092 1,152
Other 1 7
Total U.S. Government Backlog 4,898 3,522
Commercial:
Bell Helicopter 1,004 756
Cessna 12,583 8,467
Other 771 613
Total Commercial Backlog 14,358 9,836
Total Backlog $ 19,256 $ 13,358
At December 29, 2007, approximately 97% of the U.S. Government backlog was funded. 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.
Government. The U.S. Government is obligated only up to the funded amount of the contract. Additional funding is appropriated as the
contract progresses.
Cessna’s backlog includes approximately $2.0 billion in orders from a major fractional jet customer. Orders from this fractional aircraft operator
are included in backlog when the customer enters into a defi nitive master agreement and has established 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 commercial customers, which cover a wide spectrum of industries, are
included in backlog upon the customer entering into a defi nitive purchase order and receipt of required deposits.
Approximately 56% of our total backlog at December 29, 2007 represents orders that are not expected to be fi lled in 2008, including
$1.2 billion in orders for the new Citation CJ4 aircraft with fi rst customer deliveries scheduled for 2010.
U.S. Government Contracts
In 2007, approximately 19% 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 funding which is dependent upon
congressional appropriations, national and international priorities for defense spending, 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 if we default in whole or in part
by failing to perform under the terms of the applicable contract. 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 profi t on such work, adjusted
to refl ect any rate of loss had the contract been completed, plus reasonable 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