E-Z-GO 2003 Annual Report Download - page 24

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22
For 2004, Fastening Systems expects revenue growth in the low single digits, and profit margin is fore-
casted to increase as a result of further restructuring and process improvements.
The Industrial segment is comprised of five businesses including E-Z-GO, Jacobsen, Kautex, Greenlee
and Fluid & Power. Through these businesses, the segment provides its customers with innovative solu-
tions and services, including golf cars and turf-care equipment, plastic fuel systems, wire and cable
installation equipment, and industrial pumps and gears. These markets are highly competitive and price
sensitive. Consequently, significant cost reductions are required to not only offset inflation and price
concessions but also to improve margins.
The Industrial segment’s revenues increased $197 million in 2003 primarily due to a favorable foreign
exchange impact of $185 million and higher sales volume of $131 million at Kautex as a result of new
product launches and a continued strong automotive market. These increases were partially offset by
lower sales volume of $123 million at E-Z-GO and Jacobsen, reflecting reduced demand that was large-
ly attributable to a depressed golf market.
Segment profit decreased $22 million in 2003 primarily due to lower profit of $52 million at E-Z-GO and
Jacobsen, due to lower sales as a result of the depressed golf market, the impact of adjusting produc-
tion schedules to the lower demand and $12 million in higher bad debt provisions as a result of a finan-
cially weakened customer base. This decrease was partially offset by $30 million related to improved
results in each of the other businesses primarily as a result of improved cost performance.
Segment profit decreased $117 million in 2002 primarily due to $94 million related to the divestitures in
2001. Excluding the divestitures, profit decreased $23 million primarily due to lower sales volume.
For 2004,Textron expects Industrial revenues to increase slightly and is not planning on a rebound in its
end-user markets. Kautex sales are expected to be slightly higher as a result of a continued strong auto-
motive market while the remaining businesses are expected to be flat. Segment margins are forecasted
to increase, reflecting restructuring and process improvements as well as lower manufacturing start-up
costs and bad debt provisions.
The Finance segment is a diversified commercial finance business with core operations in aircraft
finance, asset-based lending, distribution finance, golf finance, resort finance and structured capital. Its
financing activities are confined almost exclusively to secured lending and leasing to commercial mar-
kets. Within these core operations, this segment provides financing programs for products manufac-
tured by Textron. In 2003, management has continued its focus on growing its core business while liqui-
dating non-core assets.
The Finance segment’s revenues decreased $12 million in 2003 primarily due to lower finance charges
and discounts of $9 million from lower average finance receivables and a decline in syndication income
due to a nonrecurring gain in 2002 of $9 million on the sale of a franchise finance portfolio.
The Finance segment’s revenues decreased $97 million in 2002 primarily due to lower yields on finance
receivables of $86 million (7.7% in 2002, compared with 9.3% in 2001), reflecting a lower interest rate
environment, primarily due to reductions in the prime rate, and lower prepayment gains of $15 million.
Segment profit increased $4 million in 2003 primarily due to a lower provision for loan losses of $30 mil-
lion ($81 million in 2003 vs. $111 million in 2002), partially offset by higher operating expense of $26 mil-
lion. The 27% decrease in the provision for loan losses reflects an improvement in portfolio quality as
The Industrial segment’s revenues decreased $1.62 billion in 2002 primarily as a result of $1.67 billion
related to the divestiture of Trim, TECT and several small product lines in 2001. Excluding the divesti-
tures, revenues increased $42 million primarily due to higher sales volume of $166 million at Kautex,
largely due to new product launches and a strong automotive market, partially offset by lower sales vol-
ume of $130 million in the remaining businesses as a result of soft markets.