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74Textron Inc. Annual Report • 2013
Note 13. Contingencies and Commitments
We are subject to legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims
relating to commercial and financial transactions; government contracts; alleged lack of compliance with applicable laws and
regulations; production partners; product liability; patent and trademark infringement; employment disputes; and environmental,
safety and health matters. Some of these legal proceedings and claims seek damages, fines or penalties in substantial amounts or
remediation of environmental contamination. As a government contractor, we are subject to audits, reviews and investigations to
determine whether our operations are being conducted in accordance with applicable regulatory requirements. Under federal
government procurement regulations, certain claims brought by the U.S. Government could result in our suspension or debarment
from U.S. Government contracting for a period of time. On the basis of information presently available, we do not believe that
existing proceedings and claims will have a material effect on our financial position or results of operations.
In the ordinary course of business, we enter into standby letter of credit agreements and surety bonds with financial institutions to
meet various performance and other obligations. These outstanding letter of credit arrangements and surety bonds aggregated to
approximately $298 million and $323 million at December 28, 2013 and December 29, 2012, respectively.
Environmental Remediation
As with other industrial enterprises engaged in similar businesses, we are involved in a number of remedial actions under various
federal and state laws and regulations relating to the environment that impose liability on companies to clean up, or contribute to
the cost of cleaning up, sites on which hazardous wastes or materials were disposed or released. Our accrued environmental
liabilities relate to installation of remediation systems, disposal costs, U.S. Environmental Protection Agency oversight costs, legal
fees, and operating and maintenance costs for both currently and formerly owned or operated facilities. Circumstances that can
affect the reliability and precision of the accruals include the identification of additional sites, 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 $40
million to $170 million. At December 28, 2013, environmental reserves of approximately $74 million have been established to
address these specific estimated liabilities. We estimate that we will likely pay our accrued environmental remediation liabilities
over the next five to ten years and have classified $21 million as current liabilities. Expenditures to evaluate and remediate
contaminated sites approximated $12 million, $15 million and $9 million in 2013, 2012 and 2011, respectively.
Leases
Rental expense approximated $95 million, $97 million and $93 million in 2013, 2012 and 2011, respectively. Future minimum
rental commitments for noncancelable operating leases in effect at December 28, 2013 approximated $64 million for 2014, $46
million for 2015, $36 million for 2016, $28 million for 2017, $21 million for 2018 and a total of $148 million thereafter.
Note 14. Supplemental Cash Flow Information
We have made the following cash payments:
(In millions) 2013 2012 2011
Interest paid:
Manufacturing group $ 124 $ 135 $ 135
Finance group 46 64 89
N
et taxes paid /(received):
Manufacturing group 223 (7) 30
Finance group (49) 43 (65)
Cash paid for interest by the Finance group included amounts paid to the Manufacturing group of $11 million and $26 million in
2012 and 2011, respectively. Cash paid for interest by the Finance group to the Manufacturing group was not significant in 2013.
In 2012, net taxes paid by the Finance group included a payment of $111 million primarily from a settlement related to the IRS’s
challenge of tax deductions claimed in prior years for certain leveraged lease transactions.