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Textron Aviation
% Change
(Dollars in millions)
2014
2013
2012
2014
2013
Revenues
$ 4,568
$ 2,784
$ 3,111
64%
(11)%
Operating expenses
4,334
2,832
3,029
53%
(7)%
Segment profit (loss)
234
(48)
82
—
—
Profit margin
5.1%
(1.7)%
2.6%
Backlog
$ 1,365
$ 1,018
$ 1,062
34%
(4)%
Textron Aviation Revenues and Operating Expenses
Factors contributing to the 2014 year-over-year revenue change are provided below:
(In millions)
2014 versus
2013
Acquisitions
$ 1,480
Volume
263
Pricing
41
Total change
$ 1,784
Textron Aviation’s revenues increased by $1.8 billion, 64%, in 2014, compared with 2013, primarily due to the impact of the
Beechcraft acquisition of $1.5 billion and higher volume of $263 million. The increase in volume was primarily the result of
higher Citation jet volume of $344 million, partially offset by lower CitationAir volume of $78 million related to exiting our
fractional share business. We delivered 159 Citation jets and 113 King Air turboprops in 2014, compared with 139 Citation jets in
2013. During 2014, the portion of the segment’s revenues derived from aftermarket sales and services represented 30% of its total
revenues, compared with 33% in 2013.
Textron Aviation’s operating expenses increased by $1.5 billion, 53%, in 2014, compared with 2013, primarily due to the
incremental operating costs related to the Beechcraft acquisition, and higher net volume as described above. Textron Aviation’s
operating expenses exclude acquisition and restructuring costs incurred across the segment as a result of the Beechcraft integration,
which are reported separately and are discussed in the Acquisition and Restructuring Costs section above.
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, Textron Aviation’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 Textron Aviation’s revenues derived from aftermarket sales and services increased to 33%,
compared with 25% in 2012, due to higher aftermarket volume and the impact of lower Citation jet revenues.
Textron Aviation’s operating expenses decreased $197 million, 7%, in 2013, compared with 2012, primarily due to lower 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 also 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.
22 Textron Inc. Annual Report • 2014