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21 Textron Inc. Annual Report • 2013
Cessna Revenues and Operating Expenses
Factors contributing to the 2013 year-over-year revenue change are provided below:
(In millions)
2013 versus
2012
Volume $ (373)
Acquisitions 33
Other 13
Total change $ (327)
In 2013, Cessna’s revenues decreased $327 million, 11%, compared with 2012, primarily due to lower Citation jet volume of $384
million and lower CitationAir volume of $114 million, largely related to the wind-down of our fractional share business. These
decreases were partially offset by higher aftermarket volume of $65 million, largely due to increased service demand, and higher
pre-owned aircraft volume of $53 million. We delivered 139 Citation jets in 2013, compared with 181 jets in 2012. During 2013,
the portion of Cessna’s revenues derived from aftermarket sales and services increased to 33% of Cessna’s revenues, compared
with 25% in the corresponding period of 2012, due to higher aftermarket volume and the impact of lower Citation jet revenues.
Cessna’s operating expenses decreased $197 million, 7%, in 2013, compared with 2012, primarily due to lower sales volume as
discussed above. The volume-related decrease in operating expenses was partially offset by $37 million of operating costs
incurred by service centers acquired at the beginning of 2013 and $33 million of inflation, largely due to higher pension expense of
$17 million.
Operating expenses in 2013 were impacted by $28 million in severance costs incurred during the first half of the year in
connection with a voluntary separation program offered to qualifying salaried employees and a reduction of certain direct
production positions due to an adjustment of our production schedule. Operating expenses in 2012 included a $27 million charge
from an unfavorable arbitration award recorded in the fourth quarter.
Factors contributing to the 2012 year-over-year revenue change are provided below:
(In millions)
2012 versus
2011
Volume and mix $ 126
Other (5)
Total change $ 121
Cessna delivered 181 Citation jets in 2012, compared with 183 jets in 2011, however revenues increased $121 million, 4%, in
2012, compared with 2011. The increase in revenues was primarily due to a $68 million impact from higher pre-owned aircraft
volume and $57 million of higher Citation jet revenues reflecting a change in mix of new jets sold during the period. During 2012,
the portion of Cessna’s revenues derived from aftermarket sales and services represented 25% of Cessna’s revenues, compared
with 24% in the corresponding period of 2011.
Cessna’s operating expenses increased by $99 million, 3%, in 2012, compared with 2011, primarily due to the following:
• $93 million in higher direct material costs, resulting from increased pre-owned aircraft sales volume and a change in the
mix of jets sold during the period.
• $35 million in cost inflation, largely reflecting a $22 million favorable benefit recorded in 2011 related to the last-in, first-
out (LIFO) method of accounting for inventories.
• $27 million charge recorded in the fourth quarter of 2012 due to an unfavorable award an arbitration panel entered against
Cessna as a result of an alleged breach of a supply agreement.
These increases were partially offset by $33 million of cost reductions from improved factory efficiency and $24 million in lower
engineering and development expenses.