Textron Inc. Annual Report • 2013 18
Item 7.Management’sDiscussion andAnalysis of Financial Condition andResults ofOperations
Overview andConsolidatedResults ofOperations
For Textron, 2013was an important yearwith significant newproduct introductions, strategic acquisitions and investments in the
future of our businesses. During 2013, we accomplished the following:
•
Invested $651 million in research and development costs, a 12% increase over the prior year, demonstrating our
commitment to expanding our current product lines across all of our businesses. As a result, we brought new products to
market inmany of our businesses, including the certification of two newmodels of Cessna aircraft, the CitationM2 and
the Sovereign+ jet.
•
Acquired six companies, including two flight simulation and aircraft training product companies for the Textron Systems
segment, two companies to augment ourGreenlee business in the Industrial segment and two service centers at Cessna for
an aggregate cashpayment of $196million.
•
Made $204 million in contributions to our pension plans and ended the year with an unfunded pension plan liability of
$199million, compared to$1.3billion at the end of 2012.
•
Reduced our debt-to-capital, net of cash ratio to 15% from 24% in the prior year, in part due to the maturity of our
convertible senior notes and the settlement of the related call option andwarrants.
An analysis of our consolidated operating results is set forth below. Amore detailed analysis of our segments’ operating results is
provided in the Segment Analysis sectiononpages 20 to28.
Revenues
(Dollars inmillions)
2013
2012
2011
Revenues
$ 12,104 $ 12,237 $ 11,275
% change comparedwith prior period
(1)%
9%
Revenues decreased $133 million, 1%, in 2013, compared with 2012, as revenue decreases in the Cessna, Finance, and Textron
Systems segmentswere partially offset by higher revenues in theBell and Industrial segments. The net revenue decrease included
the following factors:
•
Lower Cessna revenues of $327 million, primarily due to lower Citation jet volume of $384 million and CitationAir
volume of $114 million, partially offset by higher aftermarket volume of $65 million and higher pre-owned aircraft
volume of $53million.
•
Lower Finance revenues of $83 million, primarily attributable to an unfavorable impact of $46 million from lower
average finance receivables and a decrease of $25million in revenues related to the resolution of a Timeshare account in
2012.
•
Lower Textron Systems revenues of $72 million, largely due to lower volume of $51 million in the Marine & Land
product line and lower volume of $28million in theUASproduct line.
•
Higher Bell revenues of $237million, largely due to higher volume of $163million in our military programs, primarily
reflecting higher V-22 deliveries and aftermarket volume, and $74million of higher commercial revenues, largely due to
higher aircraft volume.
•
Higher Industrial segment revenues of $112 million, primarily due to higher volume of $58 million and the impact of
acquisitions of $46million.
Revenues increased $962 million, 9%, in 2012, compared with 2011, as increases in the Bell, Cessna, Industrial and Finance
segments were partially offset by a reduction in the Textron Systems segment. The net revenue increase included the following
factors:
•
Higher Bell revenues of $749million, primarily due tohigher commercial aircraft volume of $476million and an increase
inV-22 programvolume of $231million, largelydue tohigher deliveries.
•
Higher Cessna revenues of $121million, primarily due to higher pre-owned aircraft volume of $68million and Citation
jet revenues of $57million, reflecting a change inmix of jets soldduring the period.
•
Increased Industrial segment revenues of $115 million, primarily due to higher volume of $171 million, primarily
reflecting higher market demand in the Fuel Systems and Functional Components and Golf, Turf Care and Light
