E-Z-GO 2008 Annual Report Download - page 97

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Notes to the Consolidated Financial Statements
84
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. We believe that any changes to the accruals that may result from these factors and
uncertainties will not have a material effect on our financial position or results of operations.
Based upon information currently available, we estimate that our potential environmental liabilities are within the range of $48 million to
$170 million. At the end of 2008, environmental reserves of approximately $78 million have been established to address these specific estimated
potential liabilities, including $17 million for sites related to our discontinued operations. We estimate that we will likely pay our accrued
environmental remediation liabilities over the next five to 10 years and have classified $15 million as current liabilities. Expenditures to evaluate
and remediate contaminated sites for continuing operations approximated $15 million, $7 million and $6 million in 2008, 2007 and 2006,
respectively, and discontinued operations expenditures totaled $2 million and $1 million in 2008 and 2006, respectively.
Forward Contract
We enter into a forward contract in our common stock on an annual basis. The contract is intended to modify the earnings and cash volatility of
stock-based incentive compensation indexed to our stock. The forward contract requires annual cash settlement between the counterparties based
upon a number of shares multiplied by the difference between the strike price and the prevailing common stock price. As of January 3, 2009, the
contract was for approximately 2.1 million shares with a strike price of $63.28. The market price of the stock was $15.37 at January 3, 2009,
resulting in a payable of $98 million, compared with a receivable of $62 million at December 29, 2007.
Leases
Rental expense approximated $107 million in 2008, $101 million in 2007 and $84 million in 2006. Future minimum rental commitments for
noncancelable operating leases in effect at the end of 2008 approximated $66 million for 2009, $55 million for 2010, $42 million for 2011,
$33 million for 2012, $27 million for 2013 and a total of $179 million thereafter.
Loan Commitments
At January 3, 2009, the Finance group had $1.2 billion of unused commitments to fund new and existing customers under revolving lines of
credit, compared to $1.6 billion at December 29, 2007. These loan commitments generally have an original duration of less than three years, and
funding under these facilities is dependent on the availability of eligible collateral and compliance with customary financial covenants. Since
many of the agreements will not be used to the extent committed or will expire unused, the total commitment amount does not necessarily
represent future cash requirements. We also have ongoing customer relationships, including manufacturers and dealers in the Distribution
Finance division, which do not contractually obligate us to provide funding, however, we may choose to fund under certain of these relationships
to facilitate an orderly liquidation and mitigate credit losses.
Note 17. Research and Development
Company-funded and customer-funded research and development costs are as follows:
(In millions) 2008 2007 2006
Company-funded $ 476 $ 365 $ 351
Customer-funded 504 449 435
Total research and development $ 980 $ 814 $ 786
Our customer-funded research and development costs primarily are related to U.S. Government contracts, including development contracts for
the V-22, VH-71, H-1, Intelligent Battlefield Systems and Unmanned Aircraft Systems, and, prior to its termination, the ARH.
Through Bell/Agusta Aerospace Company LLC (BAAC), Bell Helicopter, Agusta S.p.A. and two of its affiliated companies (collectively, “Agusta”)
share certain Model BA609 development costs. On behalf of BAAC, Agusta will incur development costs to enhance its investment in BAAC.
Agusta also may make cash contributions to reimburse portions of our development costs incurred on behalf of BAAC. Based on development
costs incurred, we received $8 million, $11 million and $19 million in cash contributions from Agusta, which were recorded in income in 2008,
2007 and 2006, respectively.
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. In 2007, one agreement was modified to reduce the amount of cash and in-kind development
efforts required from the participant, with corresponding reductions in the entitlements the participant may obtain upon future Model 429