E-Z-GO 2010 Annual Report Download - page 32

Download and view the complete annual report

Please find page 32 of the 2010 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 106

  • 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

20
Interest Expense
(Dollars in millions)
2010
2009
2008
Interest expense
$ 270
$ 309
$ 448
% change compared with prior period
(13)%
(31)%
Interest expense on the Consolidated Statement of Operations includes interest for both the Finance and Manufacturing borrowing
groups with interest related to intercompany borrowings eliminated. Interest expense for the Finance segment is included within
segment profit and includes intercompany interest.
Our consolidated interest expense decreased $39 million, 13%, in 2010, compared with 2009, primarily due to a $63 million decrease
for the Finance group, largely due to the reduction in its debt as it liquidates the non-captive commercial finance business. This
decrease was partially offset by higher interest expense for the Manufacturing group of $24 million, primarily due to the full year
impact in 2010 of Convertible Notes issued in May 2009. In 2009, consolidated interest expense decreased $139 million, 31%,
compared with 2008, primarily due to reduced debt in the Finance group as it liquidated receivables.
Segment Analysis
We operate in, and report financial information for, the following five business segments: Cessna, Bell, Textron Systems, Industrial
and Finance. Segment profit is an important measure used for evaluating performance and for decision-making purposes. Segment
profit for the manufacturing segments excludes interest expense, certain corporate expenses and special charges. The measurement
for the Finance segment includes interest income and expense and excludes special charges.
In our discussion of comparative results for the Manufacturing group, changes in revenue and segment profit typically are 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 changes in revenue represents increases/decreases 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, pension
or other costs. Cost performance reflects an increase or decrease in research and development, depreciation, selling and administrative
costs, warranty, product liability, quality/scrap, labor efficiency, overhead, product line profitability, start-up, ramp-up and cost-
reduction initiatives or other manufacturing inputs. For the 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.
Cessna
% Change
(Dollars in millions)
2010
2009
2008
2010
2009
Revenues
$ 2,563
$ 3,320
$ 5,662
(23)%
(41)%
Operating expenses
2,592
3,122
4,757
(17)%
(34)%
Segment profit (loss)
(29)
198
905
(115)%
(78)%
Profit margin
(1)%
6%
16%
Backlog
$ 2,928
$ 4,893
$ 14,530
(40)%
(66)%
Cessna Revenues and Operating Expenses
Factors contributing to the 2010 year-over-year revenue change are provided below:
(In millions)
2010 versus
2009
Volume
$ (798)
Other
41
Total change
$ (757)
Cessna’s revenues decreased $757 million, 23%, in 2010, compared with 2009, primarily due to lower volume of business jets,
reflecting the continued downturn in the business jet market attributable to the economic recession. We delivered 179 Citation
business jets in 2010 versus 289 jets in 2009. Increased aircraft utilization and our investment in additional service capacity during
2010 contributed to increased aftermarket volume as Cessna’s aftermarket revenues increased by $80 million, 14%, from 2009.