E-Z-GO 2008 Annual Report Download - page 30

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17
Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Business Overview
Revenues increased 13% to $14.2 billion, while segment profit decreased 7% to $1.5 billion in 2008, compared with 2007. The revenue increase
was largely due to the acquisition of AAI Corporation (AAI), higher volume in our aerospace and defense businesses, and pricing. The decrease in
segment profit was largely due to higher loan loss provisions in the commercial finance business, partially offset by the impact of the higher
volume and pricing. See pages 18 through 27 for more discussion of these changes on a consolidated basis and by segment.
During the second half of the year, turmoil in the capital markets and the deepening recession significantly impacted many of our businesses. On
December 22, 2008, we announced our current plan to exit the non-captive commercial finance business in the Finance segment. We also
announced a restructuring program designed to reduce costs across the company. This program, together with other volume-related reductions in
workforce announced through January 2009, will eliminate approximately 15% of our workforce worldwide. As a result of the exit plan and the
restructuring program, we incurred special charges totaling $526 million in the fourth quarter of 2008. These charges included a $293 million
charge to mark-to-market finance receivables now designated as held for sale, a $169 million impairment charge to write off all of the Finance
segment’s goodwill and $64 million in restructuring charges. See page 19 for a discussion of these special charges.
Earnings per share from continuing operations decreased largely due to the special charges and a $31 million tax charge related to the change in
investment status of a Canadian subsidiary in the Finance segment, which had a combined impact of $1.79 per share, and lower segment profit,
largely reflecting an increase in loan loss provisions at our Finance segment.
Backlog at the end of 2008 totaled $23.3 billion, a 23% increase from the prior year. Bell’s backlog increased $2.4 billion in 2008, largely due to
the V-22 multi-year contract, and Cessna’s backlog increased $1.9 billion, largely due to orders received for the wide-body long-range Citation
Columbus jet. At Cessna, while generally only firm aircraft orders for which we have received deposits are included in backlog, we have
experienced deferrals that delay the delivery of commercial aircraft to later years, as well as cancellations of orders within backlog. See the
“Backlog” section on page 5 for more information. For 2009, we have lowered our planned jet production level based on our current estimates.
We expect ongoing volatility in the timing of fulfillment of our Cessna backlog until economic conditions stabilize.
Our Industrial segment saw volume decline in most of its businesses as demand softened, with the largest decline at Kautex, reflecting numerous
automotive original equipment manufacturers (OEM) factory shutdowns around the world. Volume at E-Z-GO increased largely due to increased
fleet car sales related to the successful introduction of our new RXV model.
Our defense businesses have buffered some of the impact of the economy through programs with the U.S. Government. At Textron Systems,
revenues increased largely due to the acquisition of AAI and continued demand for Armored Security Vehicles (ASV) and other products. While
Bell experienced the loss of the Armed Reconnaissance Helicopter (ARH) program in the fourth quarter of 2008, Bell’s V-22 and H-1 programs are
performing as expected. We shipped four more V-22 aircraft and two more H-1 aircraft in 2008, compared with 2007.
Due to the current economic environment, we have experienced higher borrowing cost and, at times, limited access to the capital markets. In
February 2009, we drew down on the balance of our $3.0 billion committed bank lines of credit to pay off our outstanding commercial paper and
to provide us with additional liquidity during these uncertain times. See the “Recent Developments” section on pages 28 and 29 for a discussion
of our liquidity and capital resources.
$16 $1,600
$12 $1,200
$08
$04$ 400
$ 800
Revenues Segment Profit
$11.0 $12.6
$14.2
2006 2007 2008
$1,253
$1,595 $1,479
2006 2007 2008
$4.00
$3.00
$1.00
$2.00
Earnings per Share*
$2.66
$3.45
$1.38
2006 2007 2008
(In billions) (In millions)
* Diluted earnings per share are for continuing operations only.