jack j. pelton -...

Company Confidential

Jack J. PeltonChairman, President & CEO

Cessna Aircraft Company

JPMorgan Aviation & Transportation Conference

March 18, 2008

1

Forward-Looking Information

Certain statements in today’s discussion will be 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 materiallyfrom those contained in the statements, including the risks and uncertainties set forth under our full disclosure located at theend of this presentation.

2

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

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

4

Business Performance

33%

49%

63%

15%

25%

35%

45%

55%

65%

2005 2006 2007

252

387

307

150

200

250

300

350

400

2005 2006 2007

Units

17.3%

15.5%

13.1%

5%

10%

15%

20%

2005 2006 2007

Margin ROIC

RevenuesCitation Deliveries

3.5

5.0

4.2

2

3

4

5

2005 2006 2007

$B

5

CaravanSingle EngineCitations 5%

14%

3%

Used Aircraft

Parts, Service& Other3% 5% CitationShares

70%

Cessna Aircraft2007 Revenues: $5 Billion, Up ~20% YOY

6

$349K $479K$220K

$1.8M

Product RangeStep-up Strategy / Strong Brand Loyalty

65-75% of Citation

Sales Are Repeat

Purchases

Caravan

Mustang

CJ1+

CJ2+

CJ3

CJ4

Encore+

XLS+

Sover-eign

206

172

Cessna Pilot CentersFoundation for Bringing Customers into the Cessna Family

Cessna Pilot CentersFoundation for Bringing Customers into the Cessna Family

182

162

$20.1M$16.2M$11.6M$8.1M$8.0M$7.1M$6.1M$4.6M$2.5M

CitationX

$110K

350

400

$535K $620K

Columbus

$27.0M

7

Industry Leadership

Percentage Jets Shipped Light and Midsize,2001 – 2007

Source: GAMA and Cessna estimates

Cessna53%

Gulfstream6%

Hawker Beechcraft

24%

Bombardier13%

Dassault1%

Eclipse3%

• 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

8

0

5

10

15

20

25

30

35

Ecl

ipse

50

0Business Jet Competitive Landscape

Pri

ce $

Millio

ns

CJ1

+C

J2+

Pre

mie

r 1

A

CJ4

*

CJ3

Lear

40

XR

H-4

00

XP

En

core

+

Lear

45

XR

Haw

ker

75

0

So

vere

ign

Ch

all

en

ger

30

0C

itati

on

XG

20

0

Lear

60

XR

Haw

ker

40

00

Cessna Is Well-positioned for Continued Leadership

* In development

Haw

ker

90

0X

P

Leg

acy

60

0

Ph

en

om

30

0 *

Ph

en

om

10

0 *

Source: B&CA and company press releases

HondaDiamond

PiperAdamGrob

Sino-Swearingen

HondaDiamond

PiperAdamGrob

Sino-Swearingen

Mu

stan

g

G1

50

XLS

(+*

)

Embraer DassaultGulfstreamBombardierHawker BeechcraftCessnaEclipse

Co

lum

bu

s*C

hall

en

ger

60

5Falc

on

20

00

EX

(LX

*)

G3

50

Lear

85

*

9

Business Jets – A Growth IndustryKey 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

Source: Global Insight, JetNet, Cessna estimates

5%

10%

15%

20%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Used Citations as % of Fleet

5%

10%

15%

20%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Used Citations as % of Fleet

19%

35% 35%41%

48%53%

0%

10%

20%

30%

40%

50%

60%

2002 2003 2004 2005 2006 2007

International Citation Orders

10

Business Jet IndustryDevelopment 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

11

Business Jet Industry Development

Source: GDP Purchasing Power Parity per CIA website; Aircraft registry, Cessna analysis

Fleet Size

GDP

Mexico

Germany

Canada

Brazil

UnitedKingdom

China Japan

India

SwitzerlandAustria

Venezuela

Russia

S. AfricaAustralia

Argentina

Spain

Italy

France

Saudi Arabia Portugal

12

Europe

Affordability / acceptance

Airspace access

Airports / air traffic control

Affluence • 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

Current State

Source: Cessna analysis

Overview

13

China and India

Source: Cessna analysis

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

Current State

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

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 3 years, Citation fleet doubled with 8 new and 3 used

• 145+ new Cessna single-engine pistons entered flight training by end of 2007


Airspace access


Affluence


Airspace access


Affluence

14

Global GrowthSummary

• 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

15

Customer Support Revenue Growth

Delivering Exceptional Customer Support

0

200

400

600

800$M

2002 2003 2004 2005 2006 2007

~12% CAGR

16

Integrated Supply ChainLean 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

Cessna 162 SkyCatcherLight Sport Aircraft (LSA)

• Reverse the declining trend of new pilot starts• 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

18

Columbia Acquisition

• High-performance, composite aircraft• Enhances Cessna single-engine piston product line• 2008 investment in business restructuring• Expect attractive future profitability • Synergies

– Technology– Supply base– Operational excellence– Marketing and distribution– Customer support

19

Citation Mustang• First fully-certified jet in segment

• Approved for steep approach

• Steps-up piston-twin and turboprop owners with a high-level of brand loyalty

• Ramp to 150 annual deliveries remains on-track

• Strong demand (200 orders in ‘07)

Attractive Entry to the Citation Family,Expanding the Addressable Market

Price: $2.52 millionFAA Cert: 2006EASA Cert: May 2007’08 Deliveries: ~ 100

20

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

Upward Extension to the Single-pilot Certified Citation Family

Price: $7.995 millionFirst Flight: 1H08FAA Cert: 2H09EASA Cert: 2H10Deliveries: 1H10

22

Citation ColumbusValue Proposition

• Significant loyal customer base supports product line extension

• Strong performance – 4,000 nm range at .80M

– Max speed of 488 ktas

– Takeoff (SL, ISA, MTOW) 5,400 ft

– Landing (SL, ISA, MLW) 3,500 ft

– Full fuel payload of 1,950 lbs

• Customer validated cabin – Best in class seated headroom and length

– Matches top competitor standing aisle height

– Comfortable seated leg and foot room

– Flat floor with refreshment area and walk-in baggage compartment

Customer Confidence in New Product Promises – Sure Thing™

23

Citation ColumbusDisciplined Program Management

• Developed comprehensive business case – Citation and competitive aircraft owner surveys– Customer tested fuselage configurations– Feedback from NBAA 2006 and European mock-up tour– Opportunity validation by independent assessment

• Strong balanced design approach

– Start with proven design attributes and mature technologies to strengthen operational availability and ease of maintenance

– Optimize with leading edge computational methods and practical new technology

– Validate through extensive testing

• Linear extension of existing capabilities mitigates risk

Leveraging Successful Track Record in Launching New Aircraft

24

Citation ColumbusMilestones

Engine testbed first flight (P&WC) 2009

Prototype first flight 2011

FAA type certification 2013

Entry into service 2014

25

New Products Drive Growth2004 - 2010

Citation CJ3$7.1M

Backlog: ~$1.3B1st Delivery: ‘04

Citation CJ2+$6.1M

Backlog: ~$720M1st Delivery: ‘06

Citation CJ1+$4.6M


Citation Mustang$2.5M


Citation XLS/XLS+$11.6M

Backlog: ~$3.0B1st Delivery: ‘04/‘08

Citation Sovereign$16.2M



Citation Encore+$8.1M

Note: December 2007 backlogs exclude CitationShares

Citation CJ4$8.0M


26

Citation Delivery and Order Trend

179

252

307

470

387

0

100

200

300

400

500

2004 2005 2006 2007 2008F

Deliveries

Mustang

Other Citations

• Booked 773 orders through December (versus 496 total in 2006)

• $12.6B Citation backlog (excludes $0.4B CitationShares)

• 2008 Sold-out

• International order mix growing, led by Europe

• 570 orders forecasted for 2008

Global Order Activity Remains Strong

27

Summary• Industry outlook remains positive

• Growing international order mix

• Continued investment in customer-focused products

• Excellent service and support capability

• Effectively managing growth and driving operational excellence

80 Years: One Sure Thing®

28

Forward Looking InformationForward-looking Information: Certain statements in this release 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] performance issues with key suppliers, subcontractors and business partners; [d] Textron's ability to perform as anticipated and to control costs under contracts with the U.S. Government; [e] 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; [f] changing priorities or reductions in the U.S. Government defense budget, including those related to Operation Iraqi Freedom, Operation Enduring Freedom and the Global War on Terrorism; [g] changes in national or international funding priorities, U.S. and foreign military budget constraints and determinations and government policies on the export and import of military and commercial products; [h] legislative or regulatory actions impacting defense operations; [i] the ability to control costs and successful implementation of various cost reduction programs; [j] the timing of new product launches and certifications of new aircraft products; [k] the occurrence of slowdowns or downturns in customer markets in which Textron products are sold or supplied or where Textron Financial offers financing; [l] changes in aircraft delivery schedules or cancellation of orders; [m] the impact of changes in tax legislation; [n] 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; [o] Textron’s ability to offset, through cost reductions, pricing pressure brought by original equipment manufacturer customers; [p] Textron's ability to realize full value of receivables; [q] the availability and cost of insurance; [r] increases in pension expenses and other post-retirement employee costs; [s] Textron Financial’s ability to maintain portfolio credit quality; [t] Textron Financial’s access to debt financing at competitive rates; [u] uncertainty in estimating contingent liabilities and establishing reserves to address such contingencies; [v] risks and uncertainties related to acquisitions and dispositions; [w] the efficacy of research and development investments to develop new products; [x] the launching of significant new products or programs which could result in unanticipated expenses; [y] 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 [z] difficulties or unanticipated expenses in connection with the consummation or integration of acquisitions, potential difficulties in employee retention following acquisitions and risks that acquisitions do not perform as planned or disrupt our current plans and operations or that anticipated synergies and opportunities will not be realized.

29

2007 Cessna ROIC

ROIC income calculation 2007Segment profit (excludes impact of 2007 acquisition) 867.0 Interest component of operating leases 16.2 Corporate charge (10.3) Segment ROIC income before income taxes 872.9 Income taxes (275.0) Segment ROIC income 597.9

Average invested capital calculationAverage segment investment (excludes impact of 2007 acquisition) 766.4 Operating leases 176.9 Average invested capital 943.3

Return on invested capital 63.4%

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