Textron Reports $0.35 Earnings per Share from Continuing Operations and $269 Million in Manufacturing Cash Flow Before Pension

  Textron Reports $0.35 Earnings per Share from Continuing Operations and $269
  Million in Manufacturing Cash Flow Before Pension Contributions for the
  Third Quarter

Business Wire

PROVIDENCE, R.I. -- October 18, 2013

Textron Inc. (NYSE: TXT) today reported third quarter 2013 income from
continuing operations of $0.35 per share, compared to $0.48 per share in the
third quarter of 2012. Total revenues in the quarter were $2.9 billion, down
$96 million from the third quarter of 2012.

Manufacturing segment profit was $195 million compared to $254 million in the
third quarter of 2012. Manufacturing cash flow before pension contributions
was $269 million during the third quarter compared to $153 million during last
year’s third quarter. The company contributed $16 million to its pension plans
during the third quarter.

“During the third quarter, we saw revenue growth at Bell, Industrial and
Textron Systems and lower revenues at Cessna, as the light-to-midsize business
jet market remained soft,” said Textron Chairman and CEO Scott C. Donnelly.

Outlook

Textron’s guidance for 2013 earnings per share from continuing operations is
now $1.75 - $1.85 with manufacturing cash flow before pension contributions
between $200 million - $300 million. Expected pension contributions remain at
about $200 million. The company’s previous outlook for earnings per share from
continuing operations guidance was $1.90 - $2.10 and its outlook for
manufacturing cash flow before pension contributions had been approximately
$400 million.

“We are reducing our 2013 guidance to reflect lower margins at Bell due to
manufacturing inefficiencies associated with the labor disruptions resulting
from negotiations with bargained employees and implementation of a new
enterprise resource planning system, and lower aircraft deliveries at Cessna,”
Donnelly added.

Third Quarter Segment Results

Cessna

Revenues at Cessna decreased $185 million, reflecting the delivery of 25 new
Citations in the quarter, down from 41 units in last year’s third quarter.

Cessna recorded a segment loss of $23 million compared to a profit of $30
million from a year ago, reflecting the impact of the lower jet deliveries.

Cessna backlog at the end of the third quarter was $1.07 billion, up $61
million from the second quarter of 2013.

Bell

Bell revenues increased $87 million, reflecting growth in both military and
commercial lines of business. Bell delivered 10 V-22’s and 7 H-1’s in the
quarter, compared to 11 V-22’s and 5 H-1’s in last year’s third quarter and 54
commercial helicopters, up from 46 units last year.

Segment profit decreased $34 million, primarily due to unfavorable
performance, largely resulting from manufacturing inefficiencies associated
with the labor disruptions resulting from negotiations with bargained
employees and implementation of a new enterprise resource planning system.

Employees ratified a new five-year contract on October 13, 2013.

Bell backlog at the end of the third quarter was $6.40 billion, down $543
million from the second quarter of 2013.

Textron Systems

Revenues at Textron Systems increased $5 million from the third quarter of
2012, primarily due to higher volumes at Weapons and Sensors, partially offset
by lower volumes at Unmanned Aircraft Systems and Marine & Land Systems.

Segment profit increased $14 million, reflecting favorable performance across
most product lines.

Textron Systems’ backlog at the end of the third quarter was $2.89 billion, up
$266 million from the second quarter of 2013.

Industrial

Industrial revenues increased $28 million, mainly due to impacts from
acquisitions and higher volumes. Segment profit increased $14 million
primarily due to improved performance and higher volume.

Finance

Finance segment revenues decreased $31 million compared to the third quarter
of 2012. The segment reported a profit of $13 million compared to $28 million
in last year’s third quarter.

Conference Call Information

Textron will host its conference call today, October 18, 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 October 18, 2013 by dialing (320) 365-3844;
Access Code: 265927.

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: interruptions in the U.S. Government’s ability to fund its
activities and/or pay its obligations; 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 Nine Months Ended September 28, 2013 and September 29, 2012
(Dollars in millions, except per share amounts)
(Unaudited)

                   Three Months Ended                         Nine Months Ended
                     September 28,      September 29,              September 28,      September 29,
                     2013                2012                        2013                2012
REVENUES                                                                            
MANUFACTURING:                                                                          
      Cessna           $ 593               $ 778                       $ 1,861             $ 2,210
      Bell               1,162               1,075                       3,136               3,125
      Textron            405                 400                         1,256               1,166
      Systems
      Industrial        711               683                       2,239             2,194       
                         2,871               2,936                       8,492               8,695
                                                                                           
FINANCE                 33                64                        106               180         
      Total            $ 2,904            $ 3,000                    $ 8,598            $ 8,875       
      revenues
                                                                                           
SEGMENT PROFIT
MANUFACTURING:
      Cessna (a)       $ (23         )     $ 30                        $ (81         )     $ 59
      Bell               131                 165                         395                 462
      Textron            35                  21                          107                 96
      Systems
      Industrial        52                38                        188               172         
                         195                 254                         609                 789
                                                                                           
FINANCE                 13                28                        47                62          
      Segment            208                 282                         656                 851
      Profit
                                                                                           
Corporate expenses       (34         )       (38         )               (109        )       (105        )
and other, net
Interest expense, net
for Manufacturing       (29         )      (35         )              (96         )      (105        )
group
                                                                                           
Income from continuing
operations before        145                 209                         451                 641
income taxes
Income tax              (47         )      (67         )              (124        )      (206        )
expense
                                                                                           
Income from
continuing               98                  142                         327                 435
operations
  Discontinued
  operations, net of    1                 9                         4                 6           
  income taxes
Net Income             $ 99               $ 151                      $ 331              $ 441         
                                                                                           
Earnings per
share:
  Income from
  continuing           $ 0.35              $ 0.48                      $ 1.15              $ 1.47
  operations
  Discontinued
  operations, net of    -                 0.03                      0.01              0.02        
  income taxes
  Net income           $ 0.35             $ 0.51                     $ 1.16             $ 1.49        
                                                                                           
      Diluted
      average shares   281,710,000     296,920,000             284,743,000     295,697,000 
      outstanding
                                                                                           
  (a) Includes $28 million in severance costs for the nine months ended September 28, 2013.
      
      
      

Textron Inc.
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)
                                                             
                                                                  
                                                  September 28,   December 29,
                                                                 2012
                                                  2013
Assets
Cash and equivalents                              $    444        $   1,378
Accounts receivable, net                               1,024          829
Inventories                                            3,220          2,712
Other current assets                                   501            470
Net property, plant and equipment                      2,163          2,149
Other assets                                           3,174          3,173
Finance group assets                                  1,931        2,322
Total Assets                                      $    12,457    $   13,033
                                                                      
                                                                      
Liabilities and Shareholders' Equity
Short-term debt and current portion of            $    104        $   535
long-term debt
Other current liabilities                              2,779          2,977
Other liabilities                                      2,504          2,798
Long-term debt                                         1,916          1,766
Finance group liabilities                             1,574        1,966
Total Liabilities                                      8,877          10,042
                                                                      
Total Shareholders' Equity                            3,580        2,991
Total Liabilities and Shareholders' Equity        $    12,457    $   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            Nine Months Ended
                             September     September       September September
                             28,           29,             28,       29,
                             2013          2012            2013      2012
Cash flows from
operating activities:
Income from continuing       $  90         $  127          $ 296     $ 394
operations
Dividends received              -             30             30        345
from TFC
Capital contributions           -             -              (1    )   (240  )
paid to TFC
Depreciation and                89            87             271       257
amortization
Changes in working              150           (36    )       (888  )   (401  )
capital
Changes in other
assets and liabilities         32         108          (89   )  42    
and non-cash items
Net cash from
operating activities           361        316          (381  )  397   
of continuing
operations
Cash flows from
investing activities:
Capital expenditures            (110  )       (156   )       (300  )   (314  )
Net cash used in                -             (8     )       (53   )   (8    )
acquisitions
Proceeds from the sale
of property, plant and         2          7            19      9     
equipment
Net cash from                  (108  )     (157   )      (334  )  (313  )
investing activities
Cash flows from
financing activities:
Principal payments on           -             -              (312  )   (139  )
long-term debt
Settlement of                   -             -              (215  )   -
convertible debt
Proceeds from issuance          -             -              150       -
of long-term debt
Increase (decrease) in          (270  )       -              96        -
short-term debt
Proceeds from
settlement of capped            -             -              75        -
call
Net intergroup                  -             173            -         418
borrowings
Other financing                (2    )     (2     )      -       (2    )
activities, net
Net cash from                  (272  )     171          (206  )  277   
financing activities
Total cash flows from           (19   )       330            (921  )   361
continuing operations
Total cash flows from
discontinued                    2             (2     )       (5    )   (5    )
operations
Effect of exchange
rate changes on cash           2          6            (8    )  5     
and equivalents
Net change in cash and          (15   )       334            (934  )   361
equivalents
Cash and equivalents           459        898          1,378   871   
at beginning of period
Cash and equivalents         $  444      $  1,232       $ 444    $ 1,232 
at end of period
                                                                     
Manufacturing Cash Flow GAAP to Non-GAAP Reconciliations:
                                                                 
Net cash from
operating activities         $  361        $  316          $ (381  ) $ 397
of continuing
operations - GAAP
Less: Capital                   (110  )       (156   )       (300  )   (314  )
      expenditures
      Dividends
      received from             -             (30    )       (30   )   (345  )
      TFC
      Capital
Plus: contributions             -             -              1         240
      paid to TFC
      Proceeds on sale
      of property,              2             7              19        9
      plant and
      equipment
      Total pension            16         16           173     181   
      contributions
Manufacturing cash
flow before pension          $  269      $  153         $ (518  ) $ 168   
contributions-
Non-GAAP
                                                                    
                                                           2013 Outlook
Net cash from
operating activities                                       $510 - $ 610
of continuing
operations - GAAP
Less: Capital                                                (500)
      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                                              $ 200 - $ 300
      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
and debt agreements, 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 Statements of Cash Flows.

                                                            
TEXTRON INC.
Condensed Consolidated Schedule of Cash Flows
(In millions)
(Unaudited)
                                                                
                       Three Months Ended             Nine Months Ended
                       September     September        September      September
                       28,           29,              28,            29,
                       2013         2012             2013          2012
  Cash flows
  from operating
  activities:
  Income from
  continuing           $  98         $  142           $  327         $ 435
  operations
  Depreciation
  and                     93            94               285           277
  amortization
  Changes in
  working                 117           49               (624   )      (353  )
  capital
  Changes in
  other assets
  and                    51         89             (91    )    43    
  liabilities
  and non-cash
  items
  Net cash from
  operating
  activities of          359        374            (103   )    402   
  continuing
  operations
  Cash flows
  from investing
  activities:
  Finance
  receivables             45            142              157           478
  repaid
  Proceeds from
  sales of
  receivables             99            67               152           184
  and other
  finance assets
  Capital                 (110  )       (156   )         (300   )      (314  )
  expenditures
  Net cash used
  in                      -             (8     )         (53    )      (8    )
  acquisitions
  Other
  investing              3          (12    )        13         (1    )
  activities,
  net
  Net cash from
  investing              37         33             (31    )    339   
  activities
  Cash flows
  from financing
  activities:
  Principal
  payments on
  long-term and           (72   )       (81    )         (997   )      (474  )
  nonrecourse
  debt
  Proceeds from
  issuance of             10            -                412           88
  long-term debt
  Settlement of
  convertible             -             -                (215   )      -
  debt
  Increase
  (decrease) in           (270  )       -                96            -
  short-term
  debt
  Proceeds from
  settlement of           -             -                75            -
  capped call
  Other
  financing              (2    )     (3     )        -          (2    )
  activities,
  net
  Net cash from
  financing              (334  )     (84    )        (629   )    (388  )
  activities
  Total cash
  flows from              62            323              (763   )      353
  continuing
  operations
  Total cash
  flows from              2             (2     )         (5     )      (5    )
  discontinued
  operations
  Effect of
  exchange rate
  changes on             2          6              (8     )    5     
  cash and
  equivalents
  Net change in
  cash and                66            327              (776   )      353
  equivalents
  Cash and
  equivalents at         571        911            1,413      885   
  beginning of
  period
  Cash and
  equivalents at       $  637      $  1,238        $  637       $ 1,238 
  end of period

Contact:

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