Jack J. Pelton Chairman, President & Chief Executive Officer. Cessna Aircraft Company 6 November 2007

Transcription

1 Jack J. Pelton Chairman, President & Chief Executive Officer Cessna Aircraft Company 6 November 2007

2 Forward-Looking Information Certain statements in today s discussion will be forwardlooking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or project revenues, income, returns or other financial measures. These forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the risks and uncertainties set forth under our full disclosure located at the end of this presentation. 1

3 Welcome to Independence 2

4 Mission To be the premier supplier of aircraft and related services for business, personal, utility and flight training To be a model organization within the communities we serve in terms of quality, profitability, corporate responsibility, people and product development Cessna means value, dependability and an exceptional customer experience - across design, sales, production, delivery and service -around the world Taking Care of Customers Is Taking Care of Business 3

5 Cessna Aircraft 2007E Revenues: $4.9 Billion, Up ~18% YOY 67% Citations 5% Single Engine 3% Caravan 4% Used Aircraft 15% Parts, Service & Other 6% CitationShares 4

6 Business Strategies Develop and deliver customer-focused products Provide superior aftermarket services Strengthen fractional jet ownership business Drive operational readiness, reduce costs and improve productivity Create a Lean Enterprise Foster an environment that attracts, develops and retains high performing talent A Global Leader in General Aviation 5

7 Cessna Aircraft Product Range Step-up Strategy / Strong Brand Loyalty 65-75% of Citation Sales Are Repeat Purchases $1.8M $2.5M $4.6M CJ1+ $6.1M CJ2+ $7.1M CJ3 $8.0M CJ4 $8.1M Encore+ $11.6M XLS+ $16.2M Sovereign $20.1M Citation X $110K $220K $349K $479K Mustang Caravan Cessna Pilot Centers Foundation for Bringing Customers into the Cessna Family 6

8 Cessna Industry Leadership Bombardier 17% Hawker Beechcraft 24% Dassault 1% Cessna 52% Customer-focused new product development Continuous improvement in quality, reliability, service and support Proven value propositions Brand strength supported by the largest, loyal customer base in general aviation Gulfstream 6% Source: GAMA and Cessna estimates Percentage Jets Shipped Light and Midsize, Q07 7

9 30 Business Jet Competitive Landscape Eclipse 500 Phenom 100 * CJ1+ CJ2+ Premier 1A CJ3 Phenom 300 * H-400XP CJ4* Encore+ Lear 40XR Lear 45XR Hawker 750* Lear 60XR Hawker 900XP Sovereign Hawker 4000 Challenger 300 Citation X G200 Price $ Millions Legacy 600 Honda Honda Diamond Piper Piper Adam Grob Adam Grob Sino-Swearingen Learjet NXT NXT Mustang XLS(+*) G150 Eclipse Cessna Hawker Beechcraft Bombardier Gulfstream Embraer * In development Cessna Is Well-positioned for Continued Leadership Source: B&CA and company press releases

10 Business Jets A Growth Industry Key Drivers Economic expansion Longer cycles with less severe troughs New model introductions Entry-level jets Global expansion, especially Europe Replacement cycle opportunities Commercial airline environment 20% 15% 10% Used Citations as % of Fleet 5% Corporate Profits International Citation Orders 1,400 Real Corporate Profits (8 Q Shift) Jet Shipments 1,400 50% 48% 50% 1,200 1,200 41% 1,000 1,000 40% 35% 35% % % 19% % % F Source: Global Insight, JetNet, Amstat, Cessna estimates 9

11 Citation Order Environment Deliveries Mustang Other Citations Booked 609 orders through September (versus 496 total in 2006) Sold-out 2007 and 2008 International order mix growing, led by Europe F 2008F $11.2B Citation backlog (excludes $0.4B CitationShares) Global Order Activity Remains Strong 10

12 Citation Mustang $2.5M New Products Drive Growth Citation CJ1+ $4.6M Citation CJ2+ $6.1M Citation CJ3 $7.1M Backlog: ~$1.1B 1 st Delivery: 07 Backlog: ~$200M 1 st Delivery: 05 Backlog: ~$700M 1 st Delivery: 06 Backlog: ~$1.2B 1 st Delivery: 04 Citation CJ4 $8.0M Citation Encore+ $8.1M Citation XLS/XLS+ $11.6M Citation Sovereign $16.2M Backlog: ~$1.1B 1 st Delivery: 10 Backlog: ~$575M 1 st Delivery: 07 Note: September 2007 backlogs exclude CitationShares Backlog: ~$3.0B 1 st Delivery: 04/ 08 Backlog: ~$2.1B 1 st Delivery: 04 11

13 Cessna 162 SkyCatcher Light Sport Aircraft (LSA) Reverse declining general aviation trends Stimulate emerging international segments Maximize future step-up opportunities Launched July 24 at Oshkosh with ~850 orders Features include $109,500 introductory price Exclusive glass cockpit (Garmin G300) Teledyne Continental O-200D, 100hp engine Exciting New Propeller Aircraft Entry 12

14 Citation Mustang First fully-certified jet in segment Approved for steep approach Steps-up piston-twin and turboprop owners with a highlevel of brand loyalty First EASA delivery September 2007 Established world-class customer support network $2.52 million FAA Cert: 2006 EASA Cert: May F Deliveries: 44 Attractive Entry to the Citation Family, Expanding the Addressable Market 13

15 Citation CJ4 Fully integrated Collins Pro Line 21 avionics Advanced diagnostic systems New standard integrated cabin management system Newly engineered, moderately swept wing Flying the new Williams FJ44-4A electronically-controlled engines $7.995 million First Flight: 1H08 FAA Cert: 2H09 EASA Cert: 2H10 Deliveries: 1H10 Upward Extension to the Single-pilot Certified Citation Family 14

16 Large Cabin Concept Successful domestic and European mockup tour Research continues to confirm a significant loyal Citation customer base to support large cabin family All specifications on proof-of-concept mockup subject to change Nine passengers and two pilots Flat floor with refreshment area and walk-in baggage compartment 4,000 nm range at 459 ktas (NBAA IFR) Full fuel payload of 1,950 lbs Max speed of 488 ktas 82 interior cabin width Avionics and engine remain unspecified Finalizing Business Case for Larger Citation 2008 Decision 15

17 Customer Support Talent Managing Growth Field service engineers Model teams 24x7 support CESCOM enhancements Service Selective expansion of US and international capacity and capability New Products Advanced diagnostics Chief of Maintenance MSG-3 Parts Supplier management Increase global parts availability Improve AOG response Delivering Exceptional Customer Support by Strengthening Global Capability 16

18 Integrated Supply Chain Lean Enterprise - Building Quality and Managing Growth Standard procedures and mistake-proofing drive and maintain first-time quality Enables flow through variation reduction Improved Independence productivity ( ) Continued design improvement Manufacturability Serviceability Reliability Globalization Textron Aerospace de Mexico LSA sourcing in low-cost region Leverage Textron Production System, Drive Operational Excellence 17

19 Lean Vision Textron Lean Enterprise with integrated systems driving simplification with common purpose and direction Structured lean Textron Production System that drives continuous improvement and timely removal of waste Lean capability and technical support on the manufacturing floor to solve problems at the point of impact Lean culture emphasizing personal accountability for improvement Employee safety Customer satisfaction: quality, reliability and delivery Productivity, cycle time and growth capacity Margins, ROIC and shareholder value 18

20 Independence Operation Single Engine Piston Building Foundation to Support Growth 19

21 Single Engine Lean Production BEFORE AFTER 20

22 Independence Operation Mustang Production Increasing to full production of 150 per year in 2009 Exceeding expectations for squawks, acceptance flights, and on-time delivery Lean benefits include reduction of required floor space, assembly and engine build up hours 21

23 Business Jet Industry Development Criteria - The 4As Affluence Economic development Business and personal wealth distribution Airports / air traffic control Infrastructure and support Airspace access Political climate and regulatory environment Affordability / acceptance Alternatives and relative cost of operations Several Key Factors Affect the Pace of Development 22

24 Business Jet Industry Development China Japan India GDP Germany France United Kingdom Russia Italy Brazil Argentina Spain Australia S. Africa Canada Mexico Saudi Arabia Austria Switzerland Portugal Venezuela Fleet Size Source: GDP Purchasing Power Parity per CIA website; Aircraft registry, Cessna analysis 23

25 Cessna Global Network Textron Global Resources Cessna Manufacturing Field Service Engineers Authorized Sales Reps Cessna Citation Service Centers Authorized Citation Service Centers Systematically Building Global Network to Grow our Business 24

26 Current State Europe Overview Affluence Airports / air traffic control Airspace access Affordability / acceptance Robust economic growth generating wealth Weak dollar continues to support sales Jets gaining acceptance as business tools Infrastructure progressing Increasing demand from Russia and Eastern Europe Source: Cessna analysis 25

27 China and India Affluence Current State Airports / air traffic control Airspace access Affordability / acceptance China Significant pilot shortage ~21% tax on foreign business jets First Citation delivered in 1982, followed by 10 Citations over the next 20 years In the last 2 years, Citation fleet doubled with 8 new and 3 used 120+ new Cessna single-engine pistons will enter flight training by end of 2007 Summary Potential for long-term growth with improved regulations and infrastructure Cessna creating a solid foundation for the future, tapping local capabilities and building industry leadership India Significant pilot shortage ~25% tax on non-airline aircraft imports began 4/07 Infrastructure under strain Growing individual and corporate wealth Aircraft being accepted as business tools Cessna leads industry in units Source: Cessna analysis 26

28 Global Growth Summary Business aviation shaped in US (~70% fleet) International demand growing, yet fragmented Europe primary driver Emerging countries (e.g., India, China) will slowly develop Strategy focused on customers Create and capture demand Support growing fleet Leveraging global resources (talent, capacity, cost), while minimizing risk and avoiding dilution Cessna Capitalizing on Global Growth 27

29 Business Performance Units 400 Citation Deliveries 380 $B 5 Revenues E E 20% 15% 13.1% Margin 15.5% 16.75% 55% 45% 35% 33% ROIC 49% ~50% 10% 25% 5% E 15% E 28

30 Summary Industry outlook remains positive Growing international order mix Continued investment in customer-focused products Mustang expands addressable market Excellent service and support capability Effectively managing growth and driving operational excellence 80 Years: One Sure Thing 29

31 Forward Looking Information Forward-looking Information: Certain statements in this report and other oral and written statements made by Textron from time to time are forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or project revenues, income, returns or other financial measures. These forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following: [a] changes in worldwide economic and political conditions that impact demand for our products, interest rates and foreign exchange rates; [b] the interruption of production at Textron facilities or Textron s customers or suppliers; [c] Textron's ability to perform as anticipated and to control costs under contracts with the U.S. Government; [d] the U.S. Government's ability to unilaterally modify or terminate its contracts with Textron for the Government's convenience or for Textron's failure to perform, to change applicable procurement and accounting policies, and, under certain circumstances, to suspend or debar Textron as a contractor eligible to receive future contract awards; [e] changes in national or international funding priorities and government policies on the export and import of military and commercial products; [f] the ability to control costs and successful implementation of various cost reduction programs; [g] the timing of new product launches and certifications of new aircraft products; [h] the occurrence of slowdowns or downturns in customer markets in which Textron products are sold or supplied or where Textron Financial offers financing; [i] changes in aircraft delivery schedules or cancellation of orders; [j] the impact of changes in tax legislation; [k] the extent to which Textron is able to pass raw material price increases through to customers or offset such price increases by reducing other costs; [l] Textron s ability to offset, through cost reductions, pricing pressure brought by original equipment manufacturer customers; [m] Textron's ability to realize full value of receivables; [n] the availability and cost of insurance; [o] increases in pension expenses and other post-retirement employee costs; [p] Textron Financial s ability to maintain portfolio credit quality; [q] Textron Financial s access to debt financing at competitive rates; [r] uncertainty in estimating contingent liabilities and establishing reserves to address such contingencies; [s] performance of acquisitions; [t] the efficacy of research and development investments to develop new products; [u] the launching of significant new products or programs which could result in unanticipated expenses; [v] bankruptcy or other financial problems at major suppliers or customers that could cause disruptions in Textron s supply chain or difficulty in collecting amounts owed by such customers and [w] the occurrence of any event, change or other circumstance that could give rise to the termination of the UIC Agreement and Plan of Merger. 30