E-Z-GO 2001 Annual Report Download - page 23

Aircraft
2001 vs. 2000
The Aircraft segment’s revenues increased $270 million, while profit decreased $140 million.
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Cessna Aircraft’s revenues increased $229 million due to higher sales of Citation business jets and
increased spare parts and service sales. This was partially offset by low er sales of used aircraft and
Caravan and single engine piston models that have been adversely affected by the weakening economy.
Profit increased $44 million as a result of the higher revenues and improved operating performance,
partially offset by a w rite-dow n of used aircraft inventory to reflect lower prices in the current market,
low er re-sale prices for trade-in aircraft, higher engineering expense for planned program spending
related to the Sovereign business jet and the reduced volume of Caravan and single engine piston
models.
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Bell Helicopter’s revenues increased $41 million primarily due to higher revenue on the V-22 tiltrotor
aircraft contract ($54 million) and other sales to the U.S. Government ($25 million) and higher sales of
commercial spares ($21 million), partially offset by low er foreign military sales ($74 million). Bell’s profit
decreased $184 million primarily due to reduced profitability expectations ($124 million) on certain
development and production contracts including the Huey and Cobra upgrade contracts, the Model 412
and M odel 427 commercial helicopters, and the V-22 Engineering M anufacturing and Development
contract. The reduced profitability expectations were based on program reviews in the second half of
2001, and reflect the clarification of several matters including extended development schedules and
planned design changes on a number of programs, as w ell as ongoing development efforts. Profit also
decreased due to low er margins on commercial sales, low er income ($17 million in 2001 vs. $30 million
in 2000) from a joint venture related to the BA609 program, low er foreign military sales and costs
related to outsourcing the manufacture of certain parts. A favorable LIFO inventory reserve adjustment
of $8 million from a reduction in LIFO inventories w as offset by higher reserves related to receivables
and product liability issues.
In December 2000, the U.S. M arine Corps temporarily restricted the use of their V-22 tiltrotor aircraft
pending an investigation by the Department of Defense of a mishap. In April 2001, a Blue Ribbon Panel
appointed by the U.S. Secretary of Defense recommended specific changes to the softw are and hydraulic
systems and issued its unanimous recommendation for the continuation of the program. On December
21, 2001, the Department of Defense signed an Acquisition Decision M emorandum that authorizes the
V-22 program to proceed w ith continued low -rate production. The M emorandum requires additional
flight testing to ensure that the V-22 can be deployed as a safe, reliable and operationally suitable
aircraft. M anagement expects to finalize contracts in early 2002 for the next tw o lots w hich include
tw enty aircraft. Under the current schedule, Textron plans to return the V-22 to flight in April 2002 for
completion of extensive flight testing before returning to operational use in the third quarter of 2003.
Textron recognized revenue of $485 million in 2001 and $432 million in 2000 under the V-22 program.
Under the current low -rate production level, revenue in 2002 is expected to be comparable to revenue
in 2001.
2000 vs. 1999
The Aircraft segment’s revenues and profit increased $375 million and $89 million, respectively.
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Cessna Aircraft's revenues increased $342 million due to higher sales of Citation business jets and
increased spare parts and service sales. Profit increased $69 million as a result of the higher revenues
and improved operating performance, partially offset by higher engineering expense related to the
Sovereign business jet.
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Bell Helicopter’s revenues increased $33 million as higher foreign military sales ($54 million), higher
commercial spares sales ($21 million) and higher revenues on the V-22 tiltrotor aircraft contract ($41
million) were partially offset by low er sales of commercial and other military helicopters ($71 million).
Bell's profit increased $20 million due to the higher revenues and higher income related to retirement
benefits. This favorable impact w as partially offset by the low er income ($30 million in 2000 vs. $37 million
in 1999) from a joint venture related to the BA609 program. Product development expense for 2000
increased slightly as higher spending on the BA609 commercial tiltrotor aircraft (net of the benefit of the
contribution from a new supplier for the fuselage) w as offset by low er spending on other programs.
Textron Annual Report 21
Aircraft
Revenues
$4,019
$4,394 $4,664
010099
6%9%19%
Segment
Profit
$362
$451
$311
010099
(31)%25%7%