Textron Reports Second Quarter 2014 Income from Continuing Operations of $0.51 per Share, up 27.5%; Revenues up 23.5%

  Textron Reports Second Quarter 2014 Income from Continuing Operations of
  $0.51 per Share, up 27.5%; Revenues up 23.5%

Business Wire

PROVIDENCE, R.I. -- July 16, 2014

Textron Inc. (NYSE: TXT) today reported second quarter 2014 income from
continuing operations of $0.51 per share, up 27.5 percent from $0.40 per share
in the second quarter of 2013.

Total revenues in the quarter were $3.5 billion, up from $2.8 billion in the
second quarter of 2013, a 23.5 percent increase. Beechcraft contributed $425
million to the increase. Segment profit in the quarter was $304 million, up
$91 million from the second quarter of 2013.

Second quarter 2014 manufacturing cash flow before pension contributions was
$271 million compared to a use of cash of $362 million during the second
quarter of 2013. The company contributed $27 million to its pension plans
during the second quarter.

“Revenues at Textron Aviation, Bell and Industrial were up during the quarter,
while revenues at Textron Systems were down, as we expected,” said Textron
Chairman and CEO Scott C. Donnelly. Donnelly continued, “Operationally, we
achieved significant margin improvements across our manufacturing businesses,
reflecting higher volumes and good performance.”

This year’s results reflect a full-quarter impact from the company’s
acquisition of Beechcraft, completed at the end of the first quarter. This
includes a $33 million ($0.08 per share, after tax) negative impact from fair
value step-up adjustments of acquired inventories sold during the quarter and
$20 million ($0.05 per share, after-tax) in restructuring costs, recorded as
part of Acquisition and Restructuring Costs. Last year’s results included $28
million ($0.07 per share, after-tax) in severance costs recorded in Cessna’s
segment results.

Outlook

Textron confirmed its 2014 earnings per share from continuing operations
guidance of $1.92 to $2.12 and its expectation for cash flow from continuing
operations of the manufacturing group before pension contributions of $600
million to $700 million with expected pension contributions of about $90
million.

Second Quarter Segment Results

Textron Aviation

Revenues at Textron Aviation were up $623 million, reflecting the impact of
the Beechcraft acquisition and higher jet deliveries. Textron Aviation
delivered 36 new jets in the quarter, up from 20 jets in last year’s second
quarter, and 34 King Air turboprops.

Textron Aviation recorded a segment profit of $28 million in the second
quarter compared to a loss of $50 million a year ago in our Cessna segment.
The improvement reflects higher volumes, $28 million in severance costs
recorded in the second quarter of 2013 and the impact of the Beechcraft
acquisition.

Textron Aviation backlog at the end of the second quarter was $1.4 billion,
down $100 million from the end of the first quarter.

Bell

Bell revenues increased $94 million, primarily the result of higher aircraft
deliveries and a $41 million revenue benefit related to settlement with the
U.S. DOD related to the System Development and Demonstration phase of the
company’s former Armed Reconnaissance Helicopter (ARH) program, which was
terminated in October 2008.

Bell delivered 10 V-22’s and 8 H-1’s in the quarter, compared to 9 V-22’s and
6 H-1’s in last year’s second quarter and 46 commercial helicopters, compared
to 44 units last year.

Segment profit increased $6 million due to the ARH settlement.

Bell backlog at the end of the second quarter was $5.8 billion, down $422
million from the end of the first quarter.

Textron Systems

Revenues at Textron Systems decreased $140 million, reflecting lower overall
volumes.

Segment profit was flat despite lower volumes, reflecting favorable
performance across all product lines and favorable mix of contract revenues
during the quarter.

Textron Systems’ backlog at the end of the second quarter was $3.0 billion, up
$186 million from the end of the first quarter.

Industrial

Industrial revenues increased $93 million, primarily due to higher overall
volumes and the impact of acquisitions. Segment profit increased $15 million
reflecting the higher volumes and favorable performance.

Finance

Finance segment revenues decreased $4 million primarily due to gains on
finance receivable dispositions during the second quarter of 2013. Segment
profit decreased $8 million primarily due to the prior year impacts of loan
loss reversals and gains on the finance receivables dispositions, partially
offset by lower administrative expenses.

Conference Call Information

Textron will host its conference call today, July 16, 2014 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 16, 2014 by dialing (320) 365-3844;
Access Code: 307262.

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, Beechcraft, Hawker, Jacobsen,
Kautex, Lycoming, E-Z-GO, Greenlee, and Textron Systems. For more information
visit: 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; 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; continued demand softness or volatility in the
markets in which we do business; difficulty or unanticipated expenses in
connection with integrating acquired businesses; the risk that anticipated
synergies and opportunities as a result of acquisitions will not be realized
or the risk that acquisitions do not perform as planned, including, for
example, the risk that acquired businesses will not achieve revenue
projections.



TEXTRON INC.

Revenues by Segment and Reconciliation of Segment Profit to Net Income

Three and Six Months Ended June 28, 2014 and June 29, 2013

(Dollars in millions, except per share amounts)

(Unaudited)

                 Three Months Ended                          Six Months Ended
                    June 28, 2014        June 29, 2013       June 28, 2014        June 29, 2013
REVENUES                                                                        
MANUFACTURING:                                                                           
    Textron           $ 1,183                 $ 560                 $ 1,968                 $ 1,268
    Aviation
    Bell                1,119                   1,025                 1,992                   1,974
    Textron             282                     422                   645                     851
    Systems
    Industrial         894                   801                 1,691                 1,528       
                        3,478                   2,808                 6,296                   5,621
                                                                                            
FINANCE                27                    31                  56                    73          
    Total             $ 3,505                $ 2,839              $ 6,352                $ 5,694       
    revenues
                                                                                            
SEGMENT PROFIT
MANUFACTURING:
    Textron           $ 28                    $ (50         )       $ 42                    $ (58         )
    Aviation (1)
    Bell                141                     135                   237                     264
    Textron             34                      34                    73                      72
    Systems
    Industrial         94                    79                  160                   136         
                        297                     198                   512                     414
                                                                                            
FINANCE                7                     15                  11                    34          
    Segment             304                     213                   523                     448
    Profit
                                                                                            
Corporate
expenses and            (38         )           (20         )         (81         )           (75         )
other, net
Interest expense,
net for                 (36         )           (30         )         (71         )           (67         )
Manufacturing
group
Acquisition and
restructuring          (20         )          -                   (36         )          -           
costs (2)
                                                                                            
Income from
continuing              210                     163                   335                     306
operations before
income taxes
Income tax             (65         )          (49         )        (103        )          (77         )
expense
                                                                                            
Income from
continuing              145                     114                   232                     229
operations
  Discontinued
  operations, net      (1          )          (1          )        (3          )          3           
  of income taxes
Net income            $ 144                  $ 113                $ 229                  $ 232         
                                                                                            
Earnings per
share:
  Income from
  continuing          $ 0.51                  $ 0.40                $ 0.82                  $ 0.80
  operations
  Discontinued
  operations, net      -                     -                   (0.01       )          0.01        
  of income taxes
  Net income          $ 0.51                 $ 0.40               $ 0.81                 $ 0.81        
                                                                                            
    Diluted
    average           282,764,000         283,824,000       283,099,000         286,269,000 
    shares
    outstanding
  

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

(2) Acquisition and restructuring costs for the three and six months ended
June 28, 2014 include $20 million and $25 million, respectively, of
restructuring costs incurred related to the acquisition of Beech Holdings,
LLC, the parent of Beechcraft Corporation, which was completed on March 14,
2014. Transaction costs of $11 million related to the Beechcraft acquisition
are also included in the six months ended June 28, 2014

                                                         
                                                                  
Textron Inc.
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)
                                                                  
                                                             
                                           June 28, 2014     December 28,
                                                                  2013
Assets
Cash and equivalents                       $    680             $    1,163
Accounts receivable, net                         1,200                 979
Inventories                                      4,017                 2,963
Other current assets                             578                   467
Net property, plant and equipment                2,463                 2,215
Goodwill                                         2,006                 1,735
Other assets                                     2,511                 1,697
Finance group assets                            1,680            1,725
        Total Assets                       $    15,135       $    12,944
                                                                  
                                                                  
Liabilities and Shareholders'
Equity
Current portion of long-term debt          $    358             $    8
Other current liabilities                        3,599                 2,995
Other liabilities                                2,450                 2,118
Long-term debt                                   2,686                 1,923
Finance group liabilities                       1,464            1,516
        Total Liabilities                        10,557                8,560
                                                                  
Total Shareholders' Equity                      4,578            4,384
        Total Liabilities and              $    15,135       $    12,944
        Shareholders' 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              Six Months Ended
                       June 28,         June 29,       June 28,           June 29,
                        2014       2013         2014         2013   
  Cash flows from
  operating
  activities:
  Income from
  continuing           $ 141            $ 103          $ 225              $ 206
  operations
  Depreciation and       112              90             207                182
  amortization
  Changes in             125              (509 )         (138   )           (1,038 )
  working capital
  Changes in other
  assets and             (31  )           33             (11    )           (121   )
  liabilities and
  non-cash items
  Dividends
  received from          -                10             -                  30
  TFC
  Capital
  contributions         -          (1   )        -            (1     )
  paid to TFC
  Net cash from
  operating
  activities of         347        (274 )        283          (742   )
  continuing
  operations
  Cash flows from
  investing
  activities:
  Net cash used in       (61  )           (35  )         (1,550 )           (53    )
  acquisitions
  Capital                (106 )           (113 )         (172   )           (190   )
  expenditures
  Proceeds from
  the sale of            3                17             5                  17
  property, plant
  and equipment
  Other investing       (7   )      -            (10    )      -      
  activities, net
  Net cash from
  investing             (171 )      (131 )        (1,727 )      (226   )
  activities
  Cash flows from
  financing
  activities:
  Proceeds from          -                150            1,093              150
  long-term debt
  Purchases of
  Textron common         -                -              (150   )           -
  stock
  Increase
  (decrease) in          (184 )           161            -                  366
  short-term debt
  Principal
  payments on            (1   )           -              (1     )           (312   )
  long-term debt
  Settlement of          -                (215 )         -                  (215   )
  convertible debt
  Proceeds from
  settlement of          -                75             -                  75
  capped call
  Other financing       6          (4   )        19           2      
  activities, net
  Net cash from
  financing             (179 )      167          961          66     
  activities
  Total cash flows
  from continuing        (3   )           (238 )         (483   )           (902   )
  operations
  Total cash flows
  from                   (1   )           (3   )         (2     )           (7     )
  discontinued
  operations
  Effect of
  exchange rate         2          (1   )        2            (10    )
  changes on cash
  and equivalents
  Net change in
  cash and               (2   )           (242 )         (483   )           (919   )
  equivalents
  Cash and
  equivalents at        682        701          1,163        1,378  
  beginning of
  period
  Cash and
  equivalents at       $ 680       $ 459         $ 680         $ 459    
  end of period
                                                                          
  Manufacturing
  Cash Flow GAAP
  to Non-GAAP
  Reconciliations:
                                                               
  Net cash from
  operating
  activities of        $ 347            $ (274 )       $ 283              $ (742   )
  continuing
  operations -
  GAAP
  Less: Capital          (106 )           (113 )         (172   )           (190   )
  expenditures
  Dividends
  received from          -                (10  )         -                  (30    )
  TFC
  Plus: Capital
  contributions          -                1              -                  1
  paid to TFC
  Proceeds from
  the sale of            3                17             5                  17
  property, plant
  and equipment
  Total pension         27         17           44           157    
  contributions
  Manufacturing
  cash flow before
  pension              $ 271       $ (362 )       $ 160         $ (787   )
  contributions-
  Non-GAAP
                                                                     
                                                       2014 Outlook
  Net cash from
  operating
  activities of                                        $ 970 - $ 1,070
  continuing
  operations -
  GAAP
  Less: Capital                                        (465)                       
  expenditures
  Plus: Proceeds
  from the sale of                                     5
  property, plant
  and equipment
  Total pension                                        90                          
  contributions
  Manufacturing
  cash flow before
  pension                                              $ 600 - $ 700               
  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            Six Months Ended
                       June 28,       June 29,       June 28,         June 29,
                        2014      2013         2014        2013  
  Cash flows
  from
  operating
  activities:
  Income from
  continuing           $ 145          $ 114          $ 232            $ 229
  operations
  Depreciation
  and                    116            95             214              192
  amortization
  Changes in
  working                156            (301 )         (77    )         (741  )
  capital
  Changes in
  other assets
  and                   (38  )     25           (16    )     (142  )
  liabilities
  and non-cash
  items
  Net cash
  from
  operating
  activities            379       (67  )        353         (462  )
  of
  continuing
  operations
  Cash flows
  from
  investing
  activities:
  Net cash
  used in                (61  )         (35  )         (1,550 )         (53   )
  acquisitions
  Capital                (106 )         (113 )         (172   )         (190  )
  expenditures
  Finance
  receivables            25             40             58               112
  repaid
  Other
  investing             14        24           16          63    
  activities,
  net
  Net cash
  from                  (128 )     (84  )        (1,648 )     (68   )
  investing
  activities
  Cash flows
  from
  financing
  activities:
  Proceeds
  from                   20             361            1,151            402
  long-term
  debt
  Purchases of
  Textron                -              -              (150   )         -
  common stock
  Principal
  payments on
  long-term              (59  )         (443 )         (121   )         (925  )
  and
  nonrecourse
  debt
  Increase
  (decrease)
  in                     (184 )         161            -                366
  short-term
  debt
  Settlement
  of                     -              (215 )         -                (215  )
  convertible
  debt
  Proceeds
  from
  settlement             -              75             -                75
  of capped
  call
  Other
  financing             6         (4   )        19          2     
  activities,
  net
  Net cash
  from                  (217 )     (65  )        899         (295  )
  financing
  activities
  Total cash
  flows from             34             (216 )         (396   )         (825  )
  continuing
  operations
  Total cash
  flows from             (1   )         (3   )         (2     )         (7    )
  discontinued
  operations
  Effect of
  exchange
  rate changes          2         (1   )        2           (10   )
  on cash and
  equivalents
  Net change
  in cash and            35             (220 )         (396   )         (842  )
  equivalents
  Cash and
  equivalents           780       791          1,211       1,413 
  at beginning
  of period
  Cash and
  equivalents          $ 815      $ 571         $ 815        $ 571   
  at end of
  period

Contact:

Textron Inc.
Investor Contacts:
Douglas Wilburne, 401-457-2288
or
Robert Bridge, 401-457-2288
or
Media Contact:
David Sylvestre, 401-457-2362
 
Press spacebar to pause and continue. Press esc to stop.