E-Z-GO 2011 Annual Report Download - page 17

Backlog
Our backlog at the end of 2011 and 2010 is summarized below:
(In millions)
December 31,
2011
January 1,
2011
U.S. Government:
Bell*
$ 6,507
$ 6,123
Textron Systems
1,145
1,438
Cessna
45
—
Total U.S. Government backlog
7,697
7,561
Commercial:
Cessna
1,844
2,928
Bell*
839
350
Textron Systems
192
160
Industrial
37
40
Total commercial backlog
2,912
3,478
Total backlog
$ 10,609
$ 11,039
*As disclosed in our Form 10-Q for the third quarter of 2011, backlog at January 1, 2011 has been revised from the amount
previously reported, primarily to correct an error made in 2009 when the full value of a V-22 contract was included in backlog
rather than Bell’s proportionate share.
Approximately 54% of our total backlog at December 31, 2011 represents orders that are not expected to be filled in 2012. Orders
from Cessna customers, which cover a wide spectrum of industries worldwide, are included in backlog when the customer enters
into a definitive purchase agreement and the initial customer deposit is received. We work with our customers to provide
estimated delivery dates, which may be adjusted based on the customers’ needs or our production schedule, but do not establish
definitive delivery dates until approximately six months before expected delivery. There is considerable uncertainty as to when or
whether backlog will convert to revenues as the conversion depends on production capacity, customer needs and credit
availability; these factors also may be impacted by the economy and public perceptions of private corporate jet usage. While
backlog is an indicator of future revenues, we cannot reasonably estimate the year each order in backlog ultimately will result in
revenues and cash flows. Orders remain in backlog until the aircraft is delivered or upon cancellation by the customer. Upon
cancellation, deposits are used to defray costs, including remarketing fees, cost to reconfigure the aircraft and other costs incurred
as a result of the cancellation. Remaining deposits, if any, may be retained or refunded at our discretion.
Backlog with the U.S. Government in the above table includes only funded amounts as the U.S. Government is obligated only up
to the amount of funding formally appropriated for a contract. Bell’s backlog includes $3.8 billion related to a multi-year
procurement contract with the U.S. Government for the purchase of V-22 tiltrotor aircraft.
U.S. Government Contracts
In 2011, approximately 31% 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, including, if applicable, reasonable profit on such work, as well as reasonable termination costs. 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 an amount 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 and will be entitled to repayment of advance payments and progress payments
related to the terminated portions of the contract; and (c) we may be liable for excess costs incurred by the U.S. Government in
procuring undelivered items from another source.
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6 Textron Inc. Annual Report • 2011