E-Z-GO 2007 Annual Report Download - page 75

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Notes to the Consolidated Financial Statements
54
included $152 million in distribution fi nance receivables and $41 million in general aviation loans. In comparison, retained interest totaled
$179 million at the end of 2006. Cash fl ows received on these retained interests totaled $71 million in 2007, $63 million in 2006 and $64 million
in 2005. Key economic assumptions used in measuring our retained interests are as follows:
Distribution Finance Aviation Finance
Assumptions at Assumptions at Assumptions at Assumptions at
Date of Sale December 29, 2007 Date of Sale December 29, 2007
Weighted-average life (in years) 0.4 0.4 2.2 2.0
Expected credit losses (annual rate) 1.0% 0.9% 0.5% 0.2%
Residual cash fl ows discount rate 9.9% 9.4% 7.7% 9.6%
Monthly payment rate 19.1% 19.6% — —
Prepayment rate — — 27.0% 27.0%
Note 6. Inventories
Inventories are comprised of the following:
December 29, December 30,
(In millions) 2007 2006
Finished goods $ 762 $ 665
Work in process 1,868 1,562
Raw materials 636 435
3,266 2,662
Less progress/milestone payments 542 593
$ 2,724 $ 2,069
Inventories valued by the LIFO method totaled $1.7 billion and $1.5 billion at the end of 2007 and 2006, respectively. Had our LIFO inventories
been valued at current costs, their carrying values would have been approximately $307 million and $276 million higher at those respective dates.
Inventories related to long-term contracts, net of progress/milestone payments, were $710 million at the end of 2007 and $380 million at the end
of 2006.
Note 7. Property, Plant and Equipment, net
Our Manufacturing group’s property, plant and equipment, net are comprised of the following:
December 29, December 30,
(In millions) 2007 2006
Land and buildings $ 1,260 $ 1,093
Machinery and equipment 3,127 2,827
4,387 3,920
Less accumulated depreciation and amortization 2,388 2,147
$ 1,999 $ 1,773
Depreciation expense for the Manufacturing group totaled $270 million in 2007, $243 million in 2006 and $250 million in 2005.
We have incurred asset retirement obligations primarily related to costs to remove and dispose of underground storage tanks and asbestos
materials used in insulation, adhesive fi llers and fl oor tiles. There is no legal requirement to remove these items, and there currently is no plan
to remodel the related facilities or otherwise cause the impacted items to require disposal. As a result, these asset retirement obligations are not
estimable, and, in accordance with the provisions of FASB Interpretation No. 47, “Conditional Asset Retirement Obligations,” we have not
recorded a liability.