E-Z-GO 2005 Annual Report Download - page 40

Download and view the complete annual report

Please find page 40 of the 2005 E-Z-GO annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

20
Textron Inc.
Bell Segment Profit
U.S. Government Business
Profit in the U.S. Government business increased $33 million in 2005 principally due to higher V-22 volume of $26 million, reflecting the delivery
of 12 aircraft from Lots 7 and 8, higher volume and improved performance of air-launched weapons totaling $13 million, and increased ASV
deliveries and improved performance of $10 million. These increases were partially offset by $18 million of costs associated with Hurricane
Katrina.
Profit in the U.S. Government business decreased $31 million in 2004 primarily due to the $20 million impact of lower V-22 revenue, an $11 mil-
lion settlement with the U.S. Government and lower volume of training aircraft of $11 million, partially offset by the $10 million impact of higher
volume of air-launched weapons.
Commercial Business
Commercial profit increased $85 million in 2005 primarily due to the $30 million gain on the sale of our interest in the Model AB139 helicopter
program, the $29 million impact of higher international military volume and improved performance, higher spares volume of $22 million and a
$13 million impact upon resolution of uncertainties and receipt of cash related to a prior year collaborative research and development sharing
agreement. In addition, commercial profit reflected a $16 million decrease in net research and development, as higher gross research and devel-
opment expenses of $28 million were more than offset by the commercial share of reimbursements related to risk-sharing agreements from co-
development partners. These increases were partially offset by $28 million of higher selling and administrative expense and $18 million in
additional reserves recorded by Lycoming related to the retirement program discussed below and crankshaft service bulletins discussed in Note
17 to the Consolidated Financial Statements.
During the fourth quarter of 2005, Lycoming developed a plan to institute a retirement program for approximately 5,100 crankshafts, representing
the remaining crankshafts manufactured by the former supplier using the same forging technique as the crankshafts covered by prior service
bulletins. Accordingly, an additional reserve of $10 million was recorded in the fourth quarter to cover the expected cost of this planned retirement
program.
Commercial profit increased $47 million in 2004 primarily due to the $34 million impact of the higher international military sales, favorable cost
performance in the helicopter business of $31 million (including the favorable resolution of a $6 million warranty issue provided for in 2003), the
$9 million benefit from a favorable mix of aircraft and the $5 million favorable impact of a nonrecurring 2003 charge related to a recall, inspection
and customer care program at the aircraft engine business, partially offset by higher engineering expenses of $28 million.
Bell Outlook
Bell’s revenues are expected to increase in 2006, while margins are expected to drop slightly due to the certain nonrecurring items that benefited
the 2005 results. The U.S. Government business is expected to benefit from an increase in ASV volume as well as higher revenues from the ARH
and VH-71 program contracts, which is expected to be partially offset by lower V-22 revenue based on scheduled deliveries. Higher revenue is
expected in our commercial business largely due to increased deliveries in 2005.
Cessna
(Dollars in millions)
2005 2004 2003
Revenues $ 3,480 $ 2,473 $ 2,299
Segment profit $ 457 $ 267 $ 199
Profit margin 13% 11% 9%
Backlog $ 6,342 $ 5,352 $ 3,947
Cessna Aircraft Company is the world’s largest manufacturer of general aviation aircraft, based on unit sales. Cessna currently has four major
product lines: Citation business jets, single engine turboprop Caravans, Cessna single engine piston aircraft and aftermarket services. Cessna
provides dependable aircraft and premier service to corporate customers in over 75 countries. Cessna also engages in the business jet fractional
ownership market through CitationShares, a venture with TAG Aviation USA, Inc. During 2005, the economy continued to strengthen, leading to a
significant increase in business jet and single engine aircraft orders. At the same time, Cessna also realized the benefit of its continued strategy of
investment in new product development receiving FAA certification for the CJ1+ and the CJ2+ in 2005. Cessna also expects to receive certifica-
tion of the Mustang in 2006.