E-Z-GO 2011 Annual Report Download - page 37

Factors contributing to 2010 year-over-year segment profit change are provided below:
(In millions)
2010 versus
2009
Performance
$ 106
Pricing, net of inflation
23
Other
(6)
Total change
$ 123
Bell’s segment profit increased $123 million, 40%, in 2010, compared with 2009, primarily due to improved performance of $106
million and higher pricing, net of inflation of $23 million. Sales volume did not have a significant net impact on segment profit
due to the mix of commercial and military aircraft sold. The improved performance was largely due to the following factors:
$73 million attributable to the V-22 and H-1 programs, resulting from a $38 million favorable impact from efficiencies
realized in connection with the ramp-up of production lines, $21 million in profit recognized in the second quarter of
2010 related to the reimbursement of prior year costs and $14 million of lower material costs; and an
$18 million net improvement from unfavorable adjustments recorded in 2009 for the 429 program that did not occur in
2010; partially offset by
$14 million in higher research and development costs.
Bell Backlog
Bell’s backlog increased $873 million in 2011, 13%, reflecting orders in excess of deliveries. In 2010, Bell’s backlog increased $281
million, 5%, largely related to the V-22 and H-1 programs, partially offset by a decline in commercial backlog reflecting deliveries
in excess of new orders.
Textron Systems
% Change
(Dollars in millions)
2011
2010
2009
2011
2010
Revenues
$ 1,872
$ 1,979
$ 1,899
(5)%
4%
Operating expenses
1,731
1,749
1,659
(1)%
5%
Segment profit
141
230
240
(39)%
(4)%
Profit margin
8%
12%
13%
Backlog
$ 1,337
$ 1,598
$ 1,664
(16)%
(4)%
As Textron Systems sells many of its products to the U.S. Government, its business environment continues to be shaped by policy and
budget decisions determined by the U.S. Government. Recent actions of the President and Congress indicate an ongoing emphasis on
federal budget deficit reduction, and budget decisions by the President and Congress may considerably reduce discretionary spending, of
which defense constitutes a significant share. Based on the continued deterioration of this environment, the results of our annual operating
plan review, which included updated long-range forecast estimates, and the loss of certain contracts, we determined that an indicator of
potential asset impairment existed in the fourth quarter, requiring us to perform impairment tests. Based on our analysis, we determined
that certain intangible assets were impaired and recorded a $41 million pre-tax impairment charge to write down intangible assets primarily
related to customer agreements and contractual relationships associated with AAI-Logistics & Technical Services and AAI-Test &
Training businesses.
Also, in the fourth quarter of 2011, we initiated a workforce reduction at Textron Systems to streamline our cost structure that will
eliminate over 10% of the segment’s workforce in 2012. This reduction is intended to improve our ability to efficiently execute and
compete for potentially fewer opportunities with the Department of Defense and other customers. We recorded a $19 million charge
primarily for severance costs related to this action.
Textron Systems Revenues and Operating Expenses
Factors contributing to the 2011 year-over-year revenue change are provided below:
(In millions)
2011 versus
2010
Volume
$ (112)
Other
5
Total change
$ (107)
26
26 Textron Inc. Annual Report • 2011