E-Z-GO 2008 Annual Report Download - page 38

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25
Textron Inc.
Segment profit at Textron Systems increased $50 million in 2007, compared with 2006, primarily due to improved cost performance of
$61 million and $22 million in profit contributions from acquisitions, partially offset by the net unfavorable impact from inflation and pricing of
$23 million. The favorable cost performance includes $21 million of ASV improvements resulting from increased productivity and lower indirect
costs and the favorable impact from a Hurricane Katrina cost reimbursement of $21 million.
Industrial
(Dollars in millions) 2008 2007 2006
Revenues $ 2,918 $ 2,825 $ 2,611
Segment profit $ 67 $ 173 $ 149
Profit 2% 6% 6%
Industrial Revenues
Revenues in the Industrial segment increased $93 million in 2008, compared with 2007, primarily due to a favorable foreign exchange impact
of $95 million, higher pricing of $34 million and the favorable impact of an acquisition of $24 million, partially offset by lower volume of
$62 million. Volume declined in the Kautex, Greenlee and Jacobsen businesses as demand softened, with the largest decline at Kautex as the
slowing economy had a significant impact on automotive sales in the second half of 2008, resulting in numerous automotive OEM factory
shutdowns around the world. At E-Z-GO, volume increased $41 million, largely due to increased fleet car sales related to the successful
introduction of the RXV model. In response to significant decline in anticipated volume throughout all of Industrial, we have reduced production
plans for 2009 and announced in the fourth quarter of 2008 planned headcount reductions of approximately 600 employees.
Revenues in the Industrial segment increased $214 million in 2007, compared with 2006, primarily due to the favorable foreign exchange impact
of $115 million, higher volume of $112 million and higher pricing of $22 million, partially offset by the 2006 divestiture of non-core product lines
of $37 million.
Industrial Segment Profit
Segment profit in the Industrial segment decreased $106 million in 2008, compared with 2007, mainly due to inflation in excess of pricing of
$61 million, the impact of lower volume and mix of $54 million, partially offset by improved cost performance of $13 million.
Industrial segment profit increased $24 million in 2007, compared with 2006, mainly due to improved cost performance of $48 million, higher
pricing of $22 million, and the $17 million impact of higher volume and mix, partially offset by inflation of $66 million. Improved cost
performance was primarily attributable to cost reduction efforts at Kautex, while inflation largely reflects increases in material costs.
Finance
(Dollars in millions) 2008 2007 2006
Revenues $ 723 $ 875 $ 798
Segment profit $ (50) $ 222 $ 210
Profit (7)% 25% 26%
On December 22, 2008, our Board of Directors approved a plan to exit all of the commercial finance business of the Finance segment, other than
that portion of the business supporting customer purchases of Textron-manufactured products. We made the decision to exit this business due to
continued weakness in the economy and to address our long-term liquidity position in light of continuing disruption and instability in the capital
markets. In total, these actions will impact approximately $7.3 billion of the Finance segment’s $10.8 billion managed receivable portfolio. The
exit plan will be effected through a combination of orderly liquidation and selected sales and is expected to be substantially complete over the next
two to four years. The Finance group also announced a restructuring program in the fourth quarter of 2008 primarily related to headcount
reductions and asset impairments resulting from the exit plan. See “Special Charges” section on page 19 regarding charges taken as a result of
the exit plan, which are not reflected in segment profit.