E-Z-GO 2012 Annual Report Download - page 17

Textron Inc. Annual Report ● 2012 5
primarily on price, product quality and reliability, product support and reputation.
Jacobsen designs, manufactures and sells professional turf-maintenance equipment, as well as specialized turf-care vehicles.
Brand names include Ransomes, Jacobsen and Cushman. Jacobsen’s customers include golf courses, resort communities, sporting
venues and municipalities. Products are sold primarily through a worldwide network of distributors and dealers, as well as factory
direct. Jacobsen has two major competitors for professional turf-maintenance equipment and several other major competitors for
specialized turf-care products. Competition is based primarily on price, product features, product quality and reliability and
product support.
Powered Tools, Testing and Measurement Equipment
Our Greenlee business unit designs and manufactures powered equipment, electrical test and measurement instruments,
mechanical and hydraulic tools, cable connectors, and fiber optic assemblies under the Greenlee, Klauke, Paladin Tools and
Tempo brand names. These products are used principally in the construction, maintenance, telecommunications, data
communications, utility and plumbing industries. Greenlee distributes its products through a global network of sales
representatives and distributors and also sells its products directly to home improvement retailers and original equipment
manufacturers. Through joint ventures in North America and China, Greenlee also sells its products to the plumbing, industrial
manufacturing and related industries. Greenlee faces competition from numerous manufacturers based primarily on price, delivery
lead time, product quality and reliability.
Finance Segment
Our Finance segment, or the Finance group, is a commercial finance business that consists of Textron Financial Corporation (TFC)
and its consolidated subsidiaries, along with three other finance subsidiaries owned by Textron Inc. In the fourth quarter of 2008,
we announced a plan to exit the non-captive portion of the commercial finance business of our Finance segment while retaining the
captive portion of the business that supports customer purchases of products that we manufacture. The non-captive portion of this
business is based primarily in North America and includes the following product lines: Golf Mortgage, Timeshare and Structured
Capital. The exit plan is being effected through a combination of orderly liquidation and selected sales. During 2012, we reduced
our total finance receivable portfolio by $821 million primarily through liquidations. We expect to liquidate the majority of the
remaining $370 million in the non-captive portfolio over the next two years.
Our Finance segment continues to originate new customer relationships and finance receivables in the captive finance business,
which provides financing primarily for new Cessna aircraft and Bell helicopters and, to a limited extent, for new E-Z-GO and
Jacobsen equipment. We also provide financing to purchasers of pre-owned Cessna aircraft and Bell helicopters on a limited basis.
The majority of new finance receivables are cross-border transactions for aircraft sold outside of the United States. New
originations in the U.S. are primarily for purchasers who had difficulty in accessing other sources of financing for the purchase of
Textron-manufactured products.
In 2012, 2011 and 2010, our Finance group paid our Manufacturing group $309 million, $284 million and $416 million,
respectively, related to the sale of Textron-manufactured products to third parties that were financed by the Finance group. Our
Cessna and Industrial segments also received proceeds in those years of $19 million, $2 million and $10 million, respectively,
from the sale of equipment from their manufacturing operations to our Finance group for use under operating lease agreements.
The commercial finance business traditionally is extremely competitive. Our Finance segment is subject to competition from
various types of financing institutions, including banks, leasing companies, commercial finance companies and finance operations
of equipment vendors. Competition within the commercial finance industry primarily is focused on price, term, structure and
service.
Our Finance segment’s largest business risk is the collectability of its finance receivable portfolio. See “Finance Portfolio
Quality” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 30 for a
discussion of the credit quality of this portfolio.