E-Z-GO 2008 Annual Report Download - page 31

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18
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Results of Operations
In our discussion of comparative results for the Manufacturing group, changes in revenue and segment profit are typically expressed in terms of
volume, pricing, foreign exchange and acquisitions. Additionally, changes in segment profit may be expressed in terms of mix, inflation and cost-
performance. Volume represents changes in the number of units delivered or services provided. Pricing represents changes in unit pricing.
Foreign exchange is the change resulting from translating foreign-denominated amounts into U.S. dollars at exchange rates that are different from
the prior period. Acquisitions refer to the results generated from businesses that were acquired within the previous 12 months. For segment profit,
mix represents a change due to the composition of products and/or services sold at different profit margins. Inflation represents higher material,
wages, benefits or other costs. Cost performance reflects an increase or decrease in research and development, depreciation, warranty, product
liability, quality/scrap, labor efficiency, overhead, product line profitability, start-up, ramp-up and cost reduction initiatives, or other
manufacturing inputs. For U.S. Government business, performance generally refers to changes in estimated contract rates. These changes
typically relate to profit recognition associated with revisions to total estimated costs to complete a contract that reflect improved (or deteriorated)
operating performance on the contract, and are recognized by recording cumulative catch-up adjustments in the current period.
Revenues
Revenues increased $1.6 billion, or 13%, to $14.2 billion in 2008, compared with 2007. This increase is primarily due to the following factors in
our manufacturing businesses, which were partially offset by lower revenues in the commercial finance business of $152 million:
• Additional revenues from newly acquired businesses of $820 million, primarily the acquisition of AAI at Textron Systems;
• Higher manufacturing volume of $514 million, reecting:
– $341 million in higher volume at Cessna, primarily related to an increase in business jet deliveries;
– $134 million in higher volume at Bell, largely related to the V-22 and H-1 programs; and
– $101 million in increased volume at Textron Systems from higher ASV aftermarket, Lycoming and Intelligent Battlefield Systems (IBS)
products; partially offset by
– $62 million decrease in the Industrial segment, principally due to lower demand at Kautex;
• Higher pricing of $382 million, with $252 million at Cessna, $87 million at Bell and $34 million in the Industrial segment; and
• Favorable foreign exchange impact of $95 million in the Industrial segment.
Revenues increased $1.6 billion, or 15%, to $12.6 billion in 2007, compared with 2006. The primary reasons for this increase are:
• Higher manufacturing volume of $1.0 billion, reecting:
– $631 million in higher volume at Cessna, primarily related to an increase in business jet deliveries;
– $112 million increase in the Industrial segment, principally due to higher demand at Kautex;
– $142 million in higher volume at Bell, largely related to the H-1 program; and
– $93 million in increased volume at Textron Systems from higher ASV deliveries;
• Higher pricing of $320 million, with $212 million at Cessna, $87 million in Bell’s commercial business and $22 million in the
Industrial segment;
• Additional revenues from newly acquired businesses of $166 million, primarily the acquisitions of Overwatch Systems and AAI;
• Favorable foreign exchange impact of $115 million in the Industrial segment; and
• A $66 million impact from higher average nance receivables due to growth in the aviation and resort nance businesses in the
Finance segment.
Segment Profit
Segment profit decreased $116 million, or 7%, to $1.5 billion in 2008, compared with 2007. This decrease is primarily due to $272 million in
reduced profits in the Finance segment, largely due to an increase in the provision for loan losses of $201 million, partially offset by the
following factors:
• A $73 million benet from higher volume and mix reecting $110 million in higher volume at Cessna, primarily related to an increase in
business jet deliveries, offset by $54 million in lower volume and mix in the Industrial Segment;
• $50 million in prot from newly acquired businesses; and
• $43 million in pricing in excess of ination reecting $82 million in pricing in excess of ination at Cessna and $32 million at Bell, partially
offset by $61 million in inflation in excess of pricing at Industrial.