Textron Reports Increase in Fourth Quarter Earnings and Strong Cash Flow Initiates 2013 EPS Outlook at $2.10 - $2.30

  Textron Reports Increase in Fourth Quarter Earnings and Strong Cash Flow
  Initiates 2013 EPS Outlook at $2.10 - $2.30

Business Wire

PROVIDENCE, R.I. -- January 23, 2013

Textron Inc. (NYSE: TXT) today reported fourth quarter 2012 income from
continuing operations of $0.50 per share, compared to a loss of $0.06 per
share in the fourth quarter of 2011.

This year’s fourth quarter results include a previously disclosed after-tax
charge of $0.06 per share at Cessna related to an unfavorable business
arbitration award. Last year’s fourth quarter included net charges of $0.55
per share.

Total revenues in the quarter were $3.4 billion, up 3.3% from the fourth
quarter of 2011.

Full-year manufacturing cash flow before pension contributions was $793
million. The company contributed $224 million to its pension plans during the
fourth quarter, bringing full-year contributions to $405 million. Textron’s
consolidated net debt ended the year at $2.6 billion, down $974 million from
the end of last year.

“Growth in the fourth quarter was the result of strong military and commercial
demand at Bell and increased deliveries at Textron Systems, E-Z-GO and
Jacobsen, partially offset by weakness in our automotive and business jet
markets,” said Textron Chairman and CEO, Scott C. Donnelly.

Share Repurchases

During the fourth quarter, the company repurchased 11.1 million of its common
shares under its previous share repurchase authorization. On January 22, 2013
Textron’s Board of Directors approved a new authorization for 25 million
shares, under which the company intends to purchase shares to offset the
impact of dilution from stock-based compensation and benefit plans and for
opportunistic capital management purposes.

Outlook

Textron is forecasting 2013 revenues of approximately $12.9 billion, up about
6% from 2012. Earnings per share from continuing operations are expected to be
in the range of $2.10 to $2.30. Cash flow from continuing operations of the
manufacturing group before pension contributions is estimated to be between
$500 and $550 million with planned pension contributions of about $200
million.

Donnelly continued, “In 2013, we anticipate growth in revenue at Cessna on a
modest increase in jet deliveries, a higher revenue mix of business jets and
growth in aftermarket, modest growth at Bell, led by an increase in commercial
helicopter sales, growth at Systems and revenue up slightly at Industrial.”

Fourth Quarter Segment Results and Actions

Cessna

Revenues decreased $110 million, reflecting the delivery of 53 new Citation
jets in the quarter, compared with 67 in last year’s fourth quarter.

Segment profit decreased $37 million, primarily due to a $27.4 million
arbitration settlement charge and lower jet volumes.

Cessna backlog at the end of the fourth quarter was $1.1 billion, down $267
million from the end of the third quarter 2012.

Bell

Revenues increased $139 million in the fourth quarter from the same period in
the prior year. Bell delivered 9 V-22’s, 6 H-1’s and 65 commercial aircraft in
the quarter compared to 7 V-22’s, 6 H-1’s and 62 commercial units in last
year’s fourth quarter.

Segment profit increased $10 million, reflecting higher volume and mix.

Bell backlog at the end of the fourth quarter was $7.5 billion, up $1.2
billion from the end of the third quarter 2012.

Textron Systems

Revenues at Textron Systems increased $58 million, reflecting higher
deliveries in Unmanned Aerial Systems and Weapons and Sensors, partially
offset by lower vehicle deliveries at Land and Marine.

Segment profit in the quarter was $36 million, up $44 million when compared to
last year’s fourth quarter, which included $60 million in charges. Segment
profit in this year’s fourth quarter reflected higher volumes, partially
offset by a $19 million charge associated with the company’s fee-for-service
unmanned aerial systems contracts.

Textron Systems backlog at the end of the fourth quarter was $2.9 billion,
relatively flat with the end of third quarter 2012.

Industrial

Industrial revenues decreased $2 million from the fourth quarter of 2011.
Segment profit decreased $6 million reflecting cost inflation in excess of
related price increases.

Finance

Finance segment revenues increased $23 million compared to the fourth quarter
of 2011. The segment reported a profit of $2 million compared to last year’s
$232 million fourth quarter loss, which reflected a mark-to-market charge.

Since the end of the third quarter 2012, nonaccrual finance receivables
decreased from $145 million to $143 million and sixty-day plus delinquencies
decreased from $114 million to $90 million.

Finance receivables ended the quarter at $2.1 billion, reflecting liquidations
of $65 million during the quarter.

Conference Call Information

Textron will host its conference call today, January 23, 2013 at 8:00 a.m.
(Eastern) to discuss its results and outlook. The call will be available via
webcast at www.textron.com or by direct dial at (800) 230-1059 in the U.S. or
(612) 234-9959 outside of the U.S. (request the Textron Earnings Call).

In addition, the call will be recorded and available for playback beginning at
10:30 a.m. (Eastern) on Wednesday, January 23, 2012 by dialing (320) 365-3844;
Access Code: 235149.

A package containing key data that will be covered on today’s call can be
found in the Investor Relations section of the company’s website at
www.textron.com.

About Textron Inc.

Textron Inc. is a multi-industry company that leverages its global network of
aircraft, defense, industrial and finance businesses to provide customers with
innovative solutions and services. Textron is known around the world for its
powerful brands such as Bell Helicopter, Cessna Aircraft Company, Jacobsen,
Kautex, Lycoming, E-Z-GO, Greenlee, and Textron Systems. More information is
available at www.textron.com.

Non-GAAP Measures

Adjusted earnings per share from continuing operations and manufacturing cash
flow before pension contributions are non-GAAP measures that are defined and
reconciled to GAAP in an attachment to this release.

Forward-looking Information

Certain statements in this release and other oral and written statements made
by us from time to time are “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements, which may describe strategies, goals, outlook or other
non-historical matters, or project revenues, income, returns or other
financial measures, often include words such as “believe,” “expect,”
“anticipate,” “intend," “plan,” “estimate,” “guidance,” “project,” “target,”
“potential,” “will,” “should,” “could,” “likely” or “may” and similar
expressions intended to identify forward-looking statements. These statements
are only predictions and involve known and unknown risks, uncertainties, and
other factors that may cause our actual results to differ materially from
those expressed or implied by such forward-looking statements. Given these
uncertainties, you should not place undue reliance on these forward-looking
statements. 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. In addition to those factors described under “Risk
Factors” in our Annual Report on Form 10-K, among the factors that could cause
actual results to differ materially from past and projected future results are
the following: changing priorities or reductions in the U.S. Government
defense budget, including those related to military operations in foreign
countries; our ability to perform as anticipated and to control costs under
contracts with the U.S. Government; the U.S. Government’s ability to
unilaterally modify or terminate its contracts with us for its convenience or
for our failure to perform, to change applicable procurement and accounting
policies, or, under certain circumstances, to withhold payment or suspend or
debar us as a contractor eligible to receive future contract awards; changes
in foreign military funding priorities or budget constraints and
determinations, or changes in government regulations or policies on the export
and import of military and commercial products; volatility in the global
economy or changes in worldwide political conditions that adversely impact
demand for our products; volatility in interest rates or foreign exchange
rates; risks related to our international business, including establishing and
maintaining facilities in locations around the world and relying on joint
venture partners, subcontractors, suppliers, representatives, consultants and
other business partners in connection with international business, including
in emerging market countries; our Finance segment’s ability to maintain
portfolio credit quality or to realize full value of receivables and of assets
acquired upon foreclosure of receivables; performance issues with key
suppliers or subcontractors; legislative or regulatory actions, both domestic
and foreign, impacting our operations or demand for our products; our ability
to control costs and successfully implement various cost-reduction activities;
the efficacy of research and development investments to develop new products
or unanticipated expenses in connection with the launching of significant new
products or programs; the timing of our new product launches or certifications
of our new aircraft products; our ability to keep pace with our competitors in
the introduction of new products and upgrades with features and technologies
desired by our customers;increases in pension expense or employee and retiree
medical benefits; difficult conditions in the financial markets which may
adversely impact our customers’ ability to fund or finance purchases of our
products; and continued demand softness or volatility in the markets in which
we do business.

TEXTRON INC.
Revenues by Segment and Reconciliation of Segment Profit to Net Income (Loss)
(Dollars in millions, except per share amounts)
(Unaudited)

                 Three Months Ended                     Twelve Months Ended
                    December 29,      December 31,          December 29,      December 31,
                    2012                2011                  2012                2011
REVENUES
MANUFACTURING:
    Cessna          $ 901               $ 1,011               $ 3,111             $ 2,990
    Bell              1,149               1,010                 4,274               3,525
    Textron           571                 513                   1,737               1,872
    Systems
    Industrial       706               708                 2,900             2,785       
                      3,327               3,242                 12,022              11,172
                                                                                  
FINANCE              35                12                  215               103         
    Total           $ 3,362            $ 3,254              $ 12,237           $ 11,275      
    revenues
                                                                                  
SEGMENT PROFIT
MANUFACTURING:
    Cessna (a)      $ 23                $ 60                  $ 82                $ 60
    Bell              177                 167                   639                 521
    Textron           36                  (8          )         132                 141
    Systems (b)
    Industrial       43                49                  215               202         
                      279                 268                   1,068               924
                                                                                  
FINANCE (c)          2                 (232        )        64                (333        )
    Segment           281                 36                    1,132               591
    Profit
                                                                                  
Corporate
expenses and          (43         )       (39         )         (148        )       (114        )
other, net
Interest expense,
net for              (38         )      (27         )        (143        )      (140        )
Manufacturing
group
                                                                                  
Income (loss)
from continuing       200                 (30         )         841                 337
operations before
income taxes
Income tax
(expense)            (54         )      13                  (260        )      (95         )
benefit
                                                                                  
Income (loss)
from continuing       146                 (17         )         581                 242
operations
  Discontinued
  operations, net    2                 (2          )        8                 -           
  of income taxes
Net income          $ 148              $ (19         )       $ 589              $ 242         
(loss)
                                                                                  
Earnings per
share:
  Income (loss)
  from continuing   $ 0.50              $ (0.06       )       $ 1.97              $ 0.79
  operations
  Discontinued
  operations, net    0.01              (0.01       )        0.03              -           
  of income taxes
  Net income        $ 0.51             $ (0.07       )       $ 2.00             $ 0.79        
  (loss)
                                                                                  
    Diluted
    average
    shares           291,562,000      278,881,000        294,663,000      307,255,000 
    outstanding
    (d)
                                                                                                

(a)  Fourth quarter of 2012 includes a $27 million charge related to an award
      against Cessna in an arbitration proceeding.
      
      Fourth quarter of 2011 includes a $41 million non-cash impairment charge
(b)   to write down certain intangible assets and approximately $19 million in
      severance costs.
      
      Fourth quarter of 2011 includes a $186 million non-cash initial
(c)   mark-to-market adjustment for remaining finance receivables in the Golf
      Mortgage portfolio that were transferred to the held for sale
      classification in the quarter.
      
      For the fourth quarter of 2011, the potential dilutive effect of stock
      options, restricted stock units and the shares that could be issued upon
      the conversion of our 4.50% Convertible Senior Notes and upon the
(d)   exercise of the related warrants was excluded from the computation of
      diluted weighted-average shares outstanding as the shares would have an
      anti-dilutive effect on the loss from continuing operations. Fully
      diluted shares were used to calculate earnings per share for the other
      reported periods.
      
      

Textron Inc.
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)
                                                             
                                                                 
                                                 December 29,   December 31,
                                                 2012             2011
Assets
Cash and equivalents                             $   1,378        $   871
Accounts receivable, net                             829              856
Inventories                                          2,712            2,402
Other current assets                                 470              1,134
Net property, plant and equipment                    2,149            1,996
Other assets                                         3,173            3,143
Finance group assets                                2,322         3,213
       Total Assets                              $   13,033     $   13,615
                                                                      
                                                                      
Liabilities and Shareholders' Equity
Current portion of long-term debt                $   535          $   146
Other current liabilities                            2,977            2,785
Other liabilities                                    2,798            2,826
Long-term debt                                       1,766            2,313
Finance group liabilities                           1,966         2,800
       Total Liabilities                             10,042           10,870
                                                                      
Total Shareholders' Equity                          2,991         2,745
       Total Liabilities and Shareholders'       $   13,033     $   13,615
       Equity
                                                                      
                                                                      

TEXTRON INC.
MANUFACTURING GROUP
Condensed Schedule of Cash Flows and Manufacturing Cash Flow GAAP to Non-GAAP
Reconciliations
(In millions)
(Unaudited)
                                                             
                                                                
                       Three Months Ended                Twelve Months Ended
                       December        December          December        December
                       29,             31,               29,             31,
                       2012          2011              2012          2011
Cash flows from
operating
activities:
Income from
continuing             $ 140           $ 134             $ 534           $ 464
operations
Dividends
received from            -               -                 345             179
TFC
Capital
contributions            -               (30   )           (240  )         (182  )
paid to TFC
Depreciation and         101             104               358             371
amortization
Changes in               466             152               65              54
working capital
Changes in other
assets and              (146  )     (118  )          (104  )     (125  )
liabilities and
non-cash items
Net cash from
operating
activities of           561        242             958        761   
continuing
operations
Cash flows from
investing
activities:
Capital                  (166  )         (152  )           (480  )         (423  )
expenditures
Other investing         3          30              4          -     
activities, net
Net cash from
investing               (163  )     (122  )          (476  )     (423  )
activities
Cash flows from
financing
activities:
Principal
payments on              (50   )         (16   )           (189  )         (29   )
long-term debt
Purchases of
Textron common           (272  )         -                 (272  )         -
stock
Net intergroup           72              100               490             (175  )
borrowings
Settlement of a
portion of               -               (580  )           (2    )         (580  )
convertible debt
Decrease in              -               (227  )           -               -
short-term debt
Proceeds from
issuance of              -               -                 -               496
long-term debt
Other financing         2          (37   )          2          (72   )
activities, net
Net cash from
financing               (248  )     (760  )          29         (360  )
activities
Total cash flows
from continuing          150             (640  )           511             (22   )
operations
Total cash flows
from                     (3    )         (2    )           (8    )         (5    )
discontinued
operations
Effect of
exchange rate           (1    )     (4    )          4          -     
changes on cash
and equivalents
Net change in
cash and                 146             (646  )           507             (27   )
equivalents
Cash and
equivalents at          1,232      1,517           871        898   
beginning of
period
Cash and
equivalents at         $ 1,378     $ 871            $ 1,378     $ 871   
end of period
                                                                         
Manufacturing
Cash Flow GAAP
to Non-GAAP
Reconciliations:
                                                                
Net cash from
operating
activities of          $ 561           $ 242             $ 958           $ 761
continuing
operations -
GAAP
Less: Capital           (166  )         (152  )           (480  )         (423  )
expenditures
Dividends
received from            -               -                 (345  )         (179  )
TFC
Plus: Capital
contributions            -               30                240             182
paid to TFC
Proceeds on sale
of property,             6               4                 15              17
plant and
equipment
Total pension           224        421             405        642   
contributions
Manufacturing
cash flow before
pension                $ 625       $ 545            $ 793       $ 1,000 
contributions-
Non-GAAP
                                                                     
                                                         2013 Outlook
Net cash from
operating
activities of                                            $850 - $ 900
continuing
operations -
GAAP
Less: Capital                                           (550)
expenditures
Plus: Total
pension                                                  200
contributions
Manufacturing
cash flow before
pension                                                  $500 - $ 550
contributions-
Non-GAAP
                                                                         
Free cash flow is a measure generally used by investors, analysts and management
to gauge a company’s ability to generate cash from operations in excess of that
necessary to be reinvested to sustain and grow the business and fund its
obligations. Our definition of Manufacturing free cash flow adjusts net cash from
operating activities of continuing operations for dividends received from TFC,
capital contributions provided under the Support Agreement, capital expenditures,
proceeds from the sale of property, plant and equipment and contributions to our
pension plans. We believe that our calculation provides a relevant measure of
liquidity and is a useful basis for assessing our ability to fund operations and
obligations. This measure is not a financial measure under GAAP and should be used
in conjunction with GAAP cash measures provided in our Consolidated Statement of
Cash Flows.


TEXTRON INC.
Condensed Consolidated Schedule of Cash Flows
(In millions)
(Unaudited)
                                                       
                    Three Months Ended              Twelve Months Ended
                    December 29,  December 31,     December 29,  December
                                                                   31,
                    2012          2011             2012          2011
Cash flows
from
operating
activities:
Income from
continuing          $  146         $  (17     )     $  581         $  242
operations
Depreciation
and                    106            114              383            403
amortization
Changes in
working                381            292              28             336
capital
Changes in
other assets
and                   (100  )     16             (57   )     87     
liabilities
and non-cash
items
Net cash from
operating
activities of         533        405            935        1,068  
continuing
operations
Cash flows
from
investing
activities:
Finance
receivables            -              (38     )        (22   )        (187   )
originated or
purchased
Finance
receivables            121            159              599            824
repaid
Proceeds on
receivable             3              145              116            421
sales
Capital                (166  )        (152    )        (480  )        (423   )
expenditures
Proceeds from
sale of
repossessed            62             32               133            109
assets and
properties
Other
investing             19         49             32         99     
activities,
net
Net cash from
investing             39         195            378        843    
activities
Cash flows
from
financing
activities:
Principal
payments on
long-term and          (141  )        (142    )        (615  )        (785   )
nonrecourse
debt
Purchases of
Textron                (272  )        -                (272  )        -
common stock
Proceeds from
issuance of            18             135              106            926
long-term
debt
Payments on
long-term
line of                -              (400    )        -              (1,440 )
credit
facilities
Settlement of
a portion of           -              (580    )        (2    )        (580   )
convertible
debt
Decrease in
short-term             -              (227    )        -              -
debt
Other
financing             2          (37     )       2          (72    )
activities,
net
Net cash from
financing             (393  )     (1,251  )       (781  )     (1,951 )
activities
Total cash
flows from             179            (651    )        532            (40    )
continuing
operations
Total cash
flows from             (3    )        (2      )        (8    )        (5     )
discontinued
operations
Effect of
exchange rate
changes on            (1    )     (4      )       4          (1     )
cash and
equivalents
Net change in
cash and               175            (657    )        528            (46    )
equivalents
Cash and
equivalents           1,238      1,542          885        931    
at beginning
of period
Cash and
equivalents         $  1,413    $  885          $  1,413    $  885    
at end of
period
                                                                             

Contact:

Textron
Investor Contacts:
Doug Wilburne, 401-457-2288
or
Justin Bourdon, 401-457-2288
or
Media Contact:
David Sylvestre, 401-457-2362