Textron Reports Second Quarter EPS of $0.40

  Textron Reports Second Quarter EPS of $0.40

                       Confirms 2013 Financial Guidance

Business Wire

PROVIDENCE, R.I. -- July 17, 2013

Textron Inc. (NYSE: TXT) today reported second quarter 2013 income from
continuing operations of $0.40 per share, compared to income of $0.58 per
share in the second quarter of 2012. Total revenues in the quarter were $2.8
billion, down 6% from the second quarter of 2012, primarily reflecting lower
business jet deliveries.

Segment profit was $213 million for the quarter, compared to $310 million in
the second quarter of 2012, primarily reflecting lower business jet deliveries
and $28 million in pre-tax severance costs recorded at Cessna, which were
previously announced. Manufacturing cash flow before pension contributions was
a $362 million use of cash during the second quarter compared to $121 million
of cash generated during last year’s second quarter. The company contributed
$17 million to its pension plans during the second quarter.

“Despite weakness in European markets, we saw solid growth at Textron Systems
and our Industrial businesses, as well as continued strong commercial orders
at Bell,” said Textron Chairman and CEO Scott C. Donnelly. “On the other hand,
business jet demand continued to be soft, but we believe the cost, production
and pricing actions we took are the right actions to support future growth at
Cessna.”

Outlook

Textron confirmed its 2013 earnings per share from continuing operations
guidance of $1.90 to $2.10 and its expectation for cash flow from continuing
operations of the manufacturing group before pension contributions of about
$400 million with expected pension contributions of about $200 million.

Second Quarter Segment Results

Cessna

Revenues at Cessna decreased $203 million, reflecting the delivery of 20 new
Citation jets in the quarter compared with 49 in last year’s second quarter.

Cessna recorded a segment loss of $50 million in the second quarter compared
to a profit of $35 million a year ago, reflecting the lower jet deliveries and
$28 million in pre-tax severance costs.

Cessna backlog at the end of the second quarter was $1.01 billion, down $23
million from the first quarter of 2013.

Bell

Bell revenues decreased $31 million in the second quarter from the same period
in the prior year, primarily reflecting the delivery of 44 commercial
helicopters compared to 47 units in last year’s second quarter. Bell delivered
9 V-22 and 6 H-1 aircraft in the quarter, flat with last year’s second quarter
deliveries.

Segment profit decreased $17 million, primarily reflecting an unfavorable mix
and lower commercial aircraft deliveries.

Bell backlog at the end of the second quarter was $6.95 billion, down $137
million from the first quarter of 2013.

Textron Systems

Revenues at Textron Systems increased $33 million from the second quarter of
2012, primarily due to higher volumes in the Unmanned Aircraft Systems and
Weapons and Sensors product lines, partially offset by lower deliveries at
Marine & Land and Mission Support. Segment profit decreased $6 million,
reflecting a higher mix of lower-margin service contracts.

Textron Systems’ backlog at the end of the second quarter was $2.62 billion,
down $165 million from the first quarter of 2013.

Industrial

Industrial revenues increased $45 million reflecting higher volumes and an
increase from acquisitions.  Segment profit increased $18 million primarily
due to improved performance and higher volume.

Finance

Finance segment revenues decreased $24 million compared to the second quarter
of 2012. The segment reported a profit of $15 million compared to $22 million
in last year’s second quarter.

Conference Call Information

Textron will host its conference call today, July 17, 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) 230-1092 in the U.S. or
(612) 234-9960 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, July 17, 2013 by dialing (320) 365-3844;
Access Code: 265926.

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

Manufacturing cash flow before pension contributions is a non-GAAP measure
that is 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 the U.S.
Government’s 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 expenses 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
Three and Six Months Ended June 29, 2013 and June 30, 2012
(Dollars in millions, except per share amounts)
(Unaudited)

                 Three Months Ended                    Six Months Ended
                  June 29, 2013     June 30, 2012      June 29, 2013     June 30, 2012
REVENUES                                                                  
MANUFACTURING:
Cessna             $ 560               $ 763               $ 1,268             $ 1,432
Bell                 1,025               1,056               1,974               2,050
Textron              422                 389                 851                 766
Systems
Industrial          801               756               1,528             1,511       
                     2,808               2,964               5,621               5,759
                                                                               
FINANCE             31                55                73                116         
Total revenues     $ 2,839            $ 3,019            $ 5,694            $ 5,875       
                                                                               
SEGMENT PROFIT
MANUFACTURING:
Cessna (a)         $ (50         )     $ 35                $ (58         )     $ 29
Bell                 135                 152                 264                 297
Textron              34                  40                  72                  75
Systems
Industrial          79                61                136               134         
                     198                 288                 414                 535
                                                                               
FINANCE             15                22                34                34          
Segment Profit       213                 310                 448                 569
                                                                               
Corporate
expenses and         (20         )       (20         )       (75         )       (67         )
other, net
Interest
expense, net
for                 (30         )      (35         )      (67         )      (70         )
Manufacturing
group
                                                                               
Income from
continuing
operations           163                 255                 306                 432
before income
taxes
Income tax          (49         )      (82         )      (77         )      (139        )
expense
                                                                               
Income from
continuing           114                 173                 229                 293
operations
Discontinued
operations,         (1          )      (1          )      3                 (3          )
net of income
taxes
Net Income         $ 113              $ 172              $ 232              $ 290         
                                                                               
Earnings per
share:
Income from
continuing         $ 0.40              $ 0.58              $ 0.80              $ 0.99
operations
Discontinued
operations,         -                 -                 0.01              (0.01       )
net of income
taxes
Net income         $ 0.40             $ 0.58             $ 0.81             $ 0.98        
                                                                               
Diluted
average shares      283,824,000     295,547,000       286,269,000     295,080,000 
outstanding
                                                                               

(a) Includes $28 million in severance costs for the three and six months ended
June 29, 2013.


Textron Inc.
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)
                                                               
                                                     June 29,     December 29,
                                                     2013         2012
Assets
Cash and equivalents                                 $ 459        $   1,378
Accounts receivable, net                               1,007          829
Inventories                                            3,203          2,712
Other current assets                                   489            470
Net property, plant and equipment                      2,141          2,149
Other assets                                           3,184          3,173
Finance group assets                                  1,957         2,322
Total Assets                                         $ 12,440     $   13,033
                                                                      
                                                                      
Liabilities and Shareholders' Equity
Short term debt and current portion of long-term     $ 374        $   535
debt
Other current liabilities                              2,615          2,977
Other liabilities                                      2,559          2,798
Long-term debt                                         1,904          1,766
Finance group liabilities                             1,608         1,966
Total Liabilities                                      9,060          10,042
                                                                      
Total Shareholders' Equity                            3,380         2,991
Total Liabilities and Shareholders' Equity           $ 12,440     $   13,033
                                                                      
                                                                      

TEXTRON INC.
MANUFACTURING GROUP
Condensed Schedule of Cash Flows and Manufacturing Cash Flow GAAP to Non-GAAP
Reconciliations
(In millions)
(Unaudited)
                                                           
                             Three Months Ended        Six Months Ended
                             June 29,   June 30,     June 29,     June 30,
                             2013       2012         2013         2012
Cash flows from
operating activities:
Income from continuing       $ 103        $ 157        $ 206          $ 267
operations
Dividends received from        10           75           30             315
TFC
Capital contributions          (1   )       -            (1     )       (240 )
paid to TFC
Depreciation and               90           86           182            170
amortization
Changes in working             (509 )       (90  )       (1,038 )       (365 )
capital
Changes in other assets
and liabilities and           33       30         (121   )    (66  )
non-cash items
Net cash from operating
activities of continuing      (274 )    258        (742   )    81   
operations
Cash flows from
investing activities:
Capital expenditures           (113 )       (85  )       (190   )       (158 )
Net cash used in               (35  )       -            (53    )       -
acquisitions
Proceeds from the sale
of property, plant and        17       2          17         2    
equipment
Net cash from investing       (131 )    (83  )      (226   )    (156 )
activities
Cash flows from
financing activities:
Increase in short-term         161          -            366            -
debt
Principal payments on          -            (139 )       (312   )       (139 )
long-term debt
Settlement of                  (215 )       -            (215   )       (2   )
convertible debt
Proceeds from issuance         150          -            150            -
of long-term debt
Proceeds from settlement       75           -            75             -
of capped call
Net intergroup                 -            245          -              245
borrowings
Other financing               (4   )    (4   )      2          2    
activities, net
Net cash from financing       167      102        66         106  
activities
Total cash flows from          (238 )       277          (902   )       31
continuing operations
Total cash flows from          (3   )       (2   )       (7     )       (3   )
discontinued operations
Effect of exchange rate
changes on cash and           (1   )    (5   )      (10    )    (1   )
equivalents
Net change in cash and         (242 )       270          (919   )       27
equivalents
Cash and equivalents at       701      628        1,378      871  
beginning of period
Cash and equivalents at      $ 459     $ 898       $ 459       $ 898  
end of period
                                                                      
Manufacturing Cash Flow
GAAP to Non-GAAP
Reconciliations:
                                                               
Net cash from operating
activities of continuing     $ (274 )     $ 258        $ (742   )     $ 81
operations - GAAP
Less:    Capital               (113 )       (85  )       (190   )       (158 )
         expenditures
         Dividends
        received from         (10  )       (75  )       (30    )       (315 )
         TFC
         Capital
Plus:    contributions         1            -            1              240
         paid to TFC
         Proceeds from
         the sale of           17           2            17             2
         property, plant
         and equipment
         Total pension        17       21         157        165  
         contributions
Manufacturing cash flow
before pension               $ (362 )   $ 121       $ (787   )   $ 15   
contributions- Non-GAAP
                                                                   
                                                       2013 Outlook
Net cash from operating
activities of continuing                               $760
operations - GAAP
Less:    Capital                                       (550)
         expenditures
         Dividends
         received from                                 (30)
         TFC
         Proceeds from
Plus:    the sale of                                   20
         property, plant
         and equipment
         Total pension                                 200
         contributions
Manufacturing cash flow
before pension                                         $400
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        Six Months Ended
                              June 29,   June 30,     June 29,    June 30,
                              2013       2012         2013        2012
Cash flows from operating
activities:
Income from continuing        $ 114        $ 173        $ 229         $ 293
operations
Depreciation and                95           92           192           183
amortization
Changes in working              (301 )       (32  )       (741  )       (402 )
capital
Changes in other assets
and liabilities and            25       48         (142  )    (46  )
non-cash items
Net cash from operating
activities of continuing       (67  )    281        (462  )    28   
operations
Cash flows from investing
activities:
Finance receivables             40           182          112           336
repaid
Proceeds from sales of
receivables and other           25           55           53            117
finance assets
Capital expenditures            (113 )       (85  )       (190  )       (158 )
Net cash used in                (35  )       -            (53   )       -
acquisitions
Other investing                (1   )    31         10        11   
activities, net
Net cash from investing        (84  )    183        (68   )    306  
activities
Cash flows from financing
activities:
Principal payments on
long-term and nonrecourse       (443 )       (249 )       (925  )       (393 )
debt
Proceeds from issuance of       361          61           402           88
long-term debt
Increase in short-term          161          -            366           -
debt
Settlement of convertible       (215 )       -            (215  )       (2   )
debt
Proceeds from settlement        75           -            75            -
of capped call
Other financing                (4   )    (4   )      2         3    
activities, net
Net cash from financing        (65  )    (192 )      (295  )    (304 )
activities
Total cash flows from           (216 )       272          (825  )       30
continuing operations
Total cash flows from           (3   )       (2   )       (7    )       (3   )
discontinued operations
Effect of exchange rate
changes on cash and            (1   )    (5   )      (10   )    (1   )
equivalents
Net change in cash and          (220 )       265          (842  )       26
equivalents
Cash and equivalents at        791      646        1,413     885  
beginning of period
Cash and equivalents at       $ 571     $ 911       $ 571      $ 911  
end of period
                                                                             
                                                                             

Contact:

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