E-Z-GO 2012 Annual Report Download - page 41

Textron Inc. Annual Report ● 2012 29
Industrial segment profit increased $40 million, 25%, in 2011 from 2010, primarily due to a $34 million impact from improved
performance and a $31 million impact from higher volume, as described above, partially offset by inflation, net of pricing of $35
million. Performance was favorable for the period due to continued cost reduction activities and improved manufacturing leverage
resulting from higher volume. Inflation, net of pricing was primarily due to higher direct material costs for commodity and
material components that exceeded related price increases, principally in the Fuel Systems and Functional Components product
line.
Finance
(In millions) 2012 2011 2010
Revenues $ 215 $ 103 $ 218
Segment profit (loss) 64 (333) (237)
Our plan to exit the non-captive commercial finance business of our Finance segment has been effected through a combination of
orderly liquidation and selected sales. We expect to liquidate the majority of the remaining $370 million of finance receivables in
the non-captive portfolio over the next two years.
Finance Revenues
Finance segment revenues increased $112 million in 2012 compared with 2011, primarily attributable to the following factors:
• $90 million increase related to the valuation of Golf Mortgage finance receivables held for sale. In 2012, we had $76
million in favorable valuation adjustments compared with unfavorable valuation adjustments of $14 million in 2011.
• $42 million of lower portfolio losses, net of gains, primarily associated with the Structured Capital and Timeshare
portfolios.
• $25 million increase due to the resolution of one significant Timeshare account that returned to accrual status and was
subsequently paid off during the third quarter of 2012.
• These increases were partially offset by a $61 million decrease attributable to lower average finance receivables of $1.2
billion.
Finance segment revenues decreased $115 million in 2011 compared with 2010, primarily attributable to the impact of a $1.8
billion lower average finance receivable balance.
Finance Segment Profit (Loss)
Finance segment profit increased $397 million in 2012, compared with 2011, primarily due to changes in valuation adjustments,
lower portfolio losses, net of gains, and the resolution of one significant Timeshare account discussed above, as well as lower
administrative expense of $56 million, primarily associated with the exit of the non-captive business. In addition, we recorded a
$186 million valuation allowance on the transfer of the Golf Mortgage portfolio from held for investment to the held for sale
classification during the fourth quarter of 2011. These increases were partially offset by a $27 million decrease in net interest
margin attributable to lower average finance receivables.
Finance segment loss increased $96 million in 2011 compared with 2010, primarily due to the $186 million valuation allowance
recorded on the transfer of the remaining Golf Mortgage portfolio from held for investment to the held for sale classification
during the fourth quarter of 2011 and a $61 million reduction in interest margin resulting from the lower average finance
receivable balance. These increases were partially offset by $131 million in lower provision for loan losses, primarily the result of
a decline in new troubled accounts in the non-captive portfolio during 2011 and a $36 million reversal of the allowance for losses
related to one significant account. In addition, administrative expense declined by $44 million primarily due to lower
compensation expense associated with a workforce reduction and other cost reductions related to the exit of the non-captive
business.