E-Z-GO 2011 Annual Report Download - page 33

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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 excludes special charges and includes interest income and expense along with
intercompany interest expense.
In our discussion of comparative results for the Manufacturing group, changes in revenue and segment profit typically are
expressed for our commercial business 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 represent
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.
Approximately 31% of our revenues were derived from contracts with the U.S. Government. For our segments that have
significant contracts with the U.S. Government, we typically express changes in segment profit related to the government business
in terms of volume, changes in program performance or changes in contract mix. Changes in volume that are discussed in net
sales typically drive corresponding changes in our segment profit based on the profit rate for a particular contract. Changes in
program performance typically relate to profit recognition associated with revisions to total estimated costs at completion that
reflect improved or deteriorated operating performance or award fee rates. Changes in contract mix refers to changes in operating
margin due to a change in the relative volume of contracts with higher or lower fee rates such that the overall average margin rate
for the segment changes.
Cessna
% Change
(Dollars in millions)
2011
2010
2009
2011
2010
Revenues
$ 2,990
$ 2,563
$ 3,320
17%
(23)%
Operating expenses
2,930
2,592
3,122
13%
(17)%
Segment profit (loss)
60
(29)
198
307%
(115)%
Profit margin
2%
(1)%
6%
Backlog
$ 1,889
$ 2,928
$ 4,893
(35)%
(40)%
Cessna Revenues and Operating Expenses
Factors contributing to the 2011 year-over-year revenue change are provided below:
(In millions)
2011 versus
2010
Volume
$ 419
Other
8
Total change
$ 427
Cessna’s revenues increased $427 million, 17%, in 2011, compared with 2010, primarily due to higher Citation jet volume and the
mix of light- and mid-size jets sold during the period, which had a $262 million impact, higher pre-owned aircraft volume of $76
million reflecting improved market demand and higher aftermarket volume of $62 million, in part due to continued investment in
additional service offerings. We delivered 183 Citation jets in 2011, compared with 179 jets in 2010. During 2011, the portion of
Cessna’s revenue derived from aftermarket sales and services represented 24% of Cessna’s revenues, compared with 26% in the
corresponding period of 2010.
22
22 Textron Inc. Annual Report • 2011