E-Z-GO 2005 Annual Report Download - page 25

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Item 1. Business of Textron
Textron Financial Corporation’s other financial services and products include transaction syndication, equipment appraisal and disposition, and
portfolio servicing offered through Textron Business Services, Inc.
Textron Financial Corporation’s financing activities are confined almost exclusively to secured lending and leasing to commercial markets.
Textron Financial Corporation’s services are offered primarily in North America. However, Textron Financial Corporation finances certain Textron
products worldwide, principally Bell helicopters and Cessna aircraft.
In 2005, 2004 and 2003, Textron Financial Corporation paid Textron $0.8 billion, $0.9 billion and $0.9 billion, respectively, relating to the sale of
manufactured products to third parties that were financed by Textron Financial Corporation. Textron also received proceeds in those years of $41
million, $77 million and $56 million, respectively, from the sale of equipment from its manufacturing operations to Textron Financial for use
under operating lease agreements.
The commercial finance environment in which Textron Financial Corporation operates is highly fragmented and extremely competitive. Textron
Financial Corporation is subject to competition from various types of financing institutions, including banks, leasing companies, insurance com-
panies, commercial finance companies and finance operations of equipment vendors. Competition within the commercial finance industry is pri-
marily focused on price, terms, structure and service.
Textron Financial Corporation’s largest business risk is the collectibility of its finance receivable portfolio. See “Finance Portfolio Quality” in Man-
agement’s Discussion and Analysis of Financial Condition and Results of Operations on page 23 for a detailed discussion of the credit quality of
this portfolio.
Discontinued Operations – Fastening Systems
In December 2005, we committed to a plan to sell our Fastening Systems business, Textron Fastening Systems (“TFS”), in its entirety. This plan
was approved by our Board of Directors on December 7, 2005, and the results of operations for TFS are now reported as discontinued operations
for financial reporting purposes. See Note 2 to the Consolidated Financial Statements for more information.
TFS offers a full range of fastening technologies – which include fasteners, engineered assemblies and automation equipment – to global cus-
tomers in the aerospace, automotive, computer, construction, electronics, electrical equipment, industrial equipment, non-automotive transporta-
tion, telecommunications and white good markets. Its customers are global and regional original equipment manufacturers, contract producers,
component manufacturers and distributors. TFS provides products, services and solutions that simplify manufacturing processes and maximize
efficiencies resulting in lower total system costs to its customers.
Revenues of TFS totaled $1.9 billion, $1.9 billion and $1.7 billion in 2005, 2004 and 2003, respectively, and are recorded within discontinued
operations.
TFS is headquartered in Troy, Michigan, and has facilities located in the following 17 countries: Australia, Austria, Brazil, Canada, China, France,
Germany, Italy, Japan, Korea, Malaysia, Mexico, Singapore, Spain, Taiwan, the United Kingdom and the United States.
TFS produces engineered threaded fasteners, fastening automation and installation tools, cold formed components, engineered assemblies, blind
fastening systems and metal stampings, and sells the new Intevia intelligent fastening system. TFS’ Full Service Provider approach integrates its
product offering with supply chain management services such as vendor managed inventory programs, plant provider programs and global
sourcing. TFS provides a wide range of design and engineering services to its customers, and derives a portion of its income from licensing
selected intellectual property assets to third parties.
TFS has hundreds of competitors in the global fastener market in essentially three tiers: global multinationals with a global market presence, typi-
cally strong in a market or in one or more product lines; mid-sized regionals with some global activity but primarily focused on regional markets;
and small local firms with a limited range within a particular product category. Competition is based primarily on price, quality, delivery, service,
support and reputation. TFS’ broad range of products, customers and markets reduces its risk of a business loss that would have a material
adverse effect on Textron Inc.