E-Z-GO 2004 Annual Report Download - page 41

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20
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Finance Outlook
In 2005, we expect the Finance segment’s profit to increase primarily as a result of improved interest margin due to higher average
finance receivables and lower relative borrowing costs.
Special Charges Special charges are more fully discussed on page 13 and are summarized below by segment:
by Segment
Restructuring Expense
Other Total
Severance Contract Fixed Asset Associated Other Special
(In millions)
Costs Terminations Impairments Costs Total Charges Charges
2004
Bell $— $ — $ (1) $ — $ (1) $ — $ (1)
Cessna — — ———— —
Fastening Systems 37 7 9 19 72 — 72
Industrial 28 37 1 6 72 — 72
Finance ———————
Corporate —————(12) (12)
$ 65 $ 44 $ 9 $ 25 $ 143 $ (12) $ 131
2003
Bell $ 2 $ — $ — $ — $ 2 $ — $ 2
Cessna 8 — 1 — 9 — 9
Fastening Systems 34 — 34 7 75 — 75
Industrial 17 2 10 13 42 — 42
Finance 4 — 2 — 6 — 6
Corporate 3 — — — 3 15 18
$ 68 $ 2 $ 47 $ 20 $ 137 $ 15 $ 152
2002
Bell $ 4 $ — $ 1 $ 1 $ 6 $ — $ 6
Cessna 23 — 2 4 29 — 29
Fastening Systems 12 2 4 4 22 — 22
Industrial 14 2 6 13 35 — 35
Finance ———————
Corporate 1 — — — 1 38 39
$ 54 $ 4 $ 13 $ 22 $ 93 $ 38 $ 131
Liquidity & Capital Resources
Textron’s financings are conducted through two borrowing groups: Textron Manufacturing and Textron Finance. This framework is
designed to enhance Textron’s borrowing power by separating the Finance segment. Textron Manufacturing consists of Textron
Inc., the parent company, consolidated with the entities that operate in the Bell, Cessna, Fastening Systems and Industrial busi-
ness segments, whose financial results are a reflection of the ability to manage and finance the development, production and deliv-
ery of tangible goods and services. Textron Finance consists of Textron’s wholly owned commercial finance subsidiary, Textron
Financial Corporation, consolidated with its subsidiaries. The financial results of Textron Finance are a reflection of its ability to
provide financial services in a competitive marketplace, at appropriate pricing, while managing the associated financial risks. The
fundamental differences between each borrowing group’s activities result in different measures used by investors, rating agencies
and analysts.
A portion of Textron Finance’s business involves financing retail purchases and leases for new and used aircraft and equipment
manufactured by Textron Manufacturing’s Bell, Cessna and Industrial segments. The cash flows related to these captive financing
activities are reflected as operating activities (by Textron Manufacturing) and as investing activities (by Textron Finance) based on
each group’s operations. These captive financing transactions have been eliminated and cash from customers or from securitiza-
tions is recognized in operating activities within the consolidated statement of cash flows when received.