Textron
 
Exhibit 99.1
 
Corporate Communications
Department
 
 
NEWS Release
 
Investor Contacts:
Doug Wilburne – 401-457-2288
Bill Pitts – 401-457-2288
 
 
FOR IMMEDIATE RELEASE
 
Media Contact:
Karen Gordon Quintal – 401-457-2362
 
 
 
 
Textron Reports Fourth Quarter and Full-Year Financial Results

Providence, Rhode Island – January 29, 2009
– Textron Inc. (NYSE: TXT) today reported fourth quarter 2008 income from continuing operations, excluding special charges, of $0.40 per share, consistent with its December 22, 2008 press release.  Revenues in the quarter were $3.6 billion, up slightly compared to the fourth quarter of 2007.

On a GAAP basis, Textron reported a loss from continuing operations for the quarter of $348 million or $1.44 per share, as compared to fourth quarter 2007 income from continuing operations of $247 million or $0.97 per share. Including discontinued operations, Textron’s fourth quarter 2008 net loss was $209 million or $0.87 per share, compared with fourth quarter 2007 net income of $256 million or $1.00 per share.

On December 22, 2008, the company announced a plan to exit all non-captive financial business. As a consequence, in the quarter, Textron recorded a number of special charges including a $293 million pre-tax mark-to-market adjustment against finance receivables held for sale, a $169 million pre-tax impairment charge to eliminate Textron Financial Corporation’s (TFC) goodwill and a $31 million tax charge related to the change in investment status of TFC’s Canadian subsidiary. Textron also recorded a pre-tax restructuring charge of $64 million related to cost-saving initiatives across the enterprise.

For the full year, Textron’s Manufacturing group generated net cash from operating activities before capital contributions to and net dividends from TFC of $899 million and incurred capital expenditures of $542 million.

TFC paid Textron net dividends of $142 million during the year. During the fourth quarter Textron made a $625 million capital contribution into TFC to maintain the earnings to fixed charge coverage ratio under the support agreement between Textron and TFC. Cash flow from operations for the Manufacturing group under a GAAP basis totaled $416 million as compare to $1.2 billion for 2007.

“Economic conditions continued to weaken during the fourth quarter, significantly impacting our Industrial and TFC businesses,” said Textron Chairman and CEO Lewis B. Campbell.  “However, for the year, we had strong performance at Bell, Cessna and Textron Systems,” Campbell added.

Combined backlog at Cessna, Bell and Textron Systems was $23.2 billion at the end of the fourth quarter, up $4.4 billion from the end of last year.

Non-GAAP Measures

Income from continuing operations, excluding special charges, and net cash provided by operating activities for the Manufacturing group before capital contribution and net dividends from TFC are Non-GAAP measures that are defined in the attachments to this release.


Outlook

Looking to 2009, the company expects the economy will continue to impact results at TFC and result in lower volumes at Cessna and Industrial. On this basis, the company estimates 2009 revenues will be approximately $12.5 billion, free cash flow from continuing operations of the manufacturing group will be about $450 million and earnings per share from continuing operations will be in the range of $1.00 to $1.50, excluding expected pre-tax restructuring charges of about $40 million.

Campbell continued, “Our priorities this year are clear – maximize cash flow and operating performance in our manufacturing businesses and aggressively convert finance receivables at TFC to cash. We’re aligning production to match expected lower commercial demand, reducing non-essential capital spending, freezing salaries, curtailing most discretionary spending, including reductions in non-critical product development, and reducing working capital.”

“We believe that we are taking the right actions and will emerge from this recession leaner and more focused. We fully expect that growth in our strong defense businesses will sustain us over the next several years. After world economies recover, this growth will be augmented by expansion at Cessna as well as the remainder of our commercial businesses,” Campbell concluded.

Segment Results
 
Cessna
 
Cessna’s fourth quarter revenues and segment profit decreased $64 million and $90 million, respectively, compared with the fourth quarter of 2007.  Revenues decreased in spite of the sale of more jet units, primarily reflecting a higher proportion of Mustang sales. This decrease was partially offset by higher pricing and the benefit from the acquisition of the Columbia single engine product lines.
 
Segment profit decreased due to used aircraft valuation adjustments, the impact from lower revenue mix, higher product development expense and overhead costs.
 
Cessna backlog at the end of the fourth quarter was $14.5 billion, up $1.9 billion from the end of last year.
 
Bell
 
Bell’s revenues and segment profit increased $98 million and $40 million in the fourth quarter.   The increase in revenues was due to higher volume and pricing.  The increased volume relates to higher V-22 revenues, partially offset by lower commercial helicopter revenues and the absence of Armed Reconnaissance Helicopter revenues.
 
Segment profit increased due to favorable cost performance, higher volume and pricing in excess of inflation, partially offset by unfavorable mix.  The cost performance reflects the non-recurrence of program charges recorded in the fourth quarter of 2007 in both military and commercial programs, and higher royalty income.
 
Bell backlog at the end of the fourth quarter was $6.2 billion, up $2.4 billion from the end of last year.
 
Textron Systems (formerly Defense & Intelligence)
 
Revenues and segment profit for Textron Systems increased $180 million and $37 million, respectively.  The increase in revenues is due to the benefit of our acquired AAI business and higher volume for ASV spares and logistics, Intelligent Battlefield Systems and Sensor Fused Weapons.
 
Segment profit increased due to favorable cost performance, higher volume and the benefit from the acquisition.
 
Fourth quarter ending backlog at Textron Systems was $2.5 billion, compared to $2.4 billion at the end of 2007.
 
Industrial
 
Revenues and segment profit decreased $135 million and $59 million, respectively, in the fourth quarter of 2008.  Revenues decreased due to lower volumes and an unfavorable foreign exchange impact, partially offset by higher pricing and the favorable impact of the Paladin Tools acquisition at Greenlee.
 
Segment profit decreased due to the impact of the lower volume and mix, inflation in excess of higher pricing, and the unfavorable foreign exchange rate impact.
 
Finance
 
Finance revenues decreased $64 million in the fourth quarter due to lower market interest rates, and lower securitization gains which were partially offset by the benefit of interest rate floors.

Segment profit decreased $171 million as a result of increased loan loss provisions, higher borrowing costs and lower securitization gains, partially offset by the benefit of interest rate floors.

Increased loan loss provisions reflected weakening general market conditions, declining collateral values and the lack of liquidity available to our borrowers and their customers.  These provisions also incorporated estimates for an increase in expected credit losses resulting from TFC’s exit plan.

Sixty-day plus delinquencies increased to 2.59% from 1.06% at the end of the third quarter. Nonperforming assets increased to 4.72% compared to 2.67% in the third quarter.

Managed receivables ended the year at $10.8 billion, versus $11.4 billion at the end of the third quarter.


Conference Call Information

Textron will host a conference call today, January 29, 2009 at 9:00 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) 288-8975 in the U.S. or (612) 332-0418 outside of the U.S. (request the Textron Earnings Call).

In addition, the call will be recorded and available for playback beginning at 12:30 p.m. Eastern time on Thursday, January 29, 2009 by dialing (320) 365-3844; Access Code: 896349.

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
 
Textron Inc. is a $14.2 billion multi-industry company operating in 28 countries with approximately 42,000 employees.  The company leverages its global network of aircraft, defense and intelligence, 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, Textron Systems and Textron Financial Corporation.  More information is available at www.textron.com.
 
###

 
Forward-looking Information
 
Certain statements in this press release and other oral and written statements made by us from time to time are forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters, or project revenues, income, returns or other financial measures. These forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the risk factors contained in our most recent Quarterly Report on Form 10-Q and the following: (a) changes in worldwide economic and political conditions that impact demand for our products, interest rates and foreign exchange rates; (b) the interruption of production at our facilities or our customers or suppliers; (c) performance issues with key suppliers, subcontractors and business partners; (d) our ability to perform as anticipated and to control costs under contracts with the U.S. Government; (e) the U.S. Government’s ability to unilaterally modify or terminate its contracts with us for the U.S. Government’s convenience or for our failure to perform, to change applicable procurement and accounting policies, and, under certain circumstances, to suspend or debar us as a contractor eligible to receive future contract awards; (f) changing priorities or reductions in the U.S. Government defense budget, including those related to Operation Iraqi Freedom, Operation Enduring Freedom and the Global War on Terrorism; (g) changes in national or international funding priorities, U.S. and foreign military budget constraints and determinations, and government policies on the export and import of military and commercial products; (h) legislative or regulatory actions impacting defense operations; (i) the ability to control costs and successful implementation of various cost-reduction programs, including the enterprise-wide restructuring program; (j) the timing of new product launches and certifications of new aircraft products; (k) the occurrence of slowdowns or downturns in customer markets in which our products are sold or supplied or where Textron Financial Corporation (TFC) offers financing; (l) changes in aircraft delivery schedules or cancellation of orders; (m) the impact of changes in tax legislation; (n) the extent to which we are able to pass raw material price increases through to customers or offset such price increases by reducing other costs; (o) our ability to offset, through cost reductions, pricing pressure brought by original equipment manufacturer customers; (p) our ability to realize full value of receivables; (q) the availability and cost of insurance; (r) increases in pension expenses and other postretirement employee costs; (s) TFC’s ability to maintain portfolio credit quality and certain minimum levels of financial performance required under its committed credit facilities and under Textron’s support agreement with TFC; (t) TFC’s access to financing, including securitizations, at competitive rates; (u) our ability to successfully exit from TFC’s commercial finance business, other than the captive finance business, including effecting an orderly liquidation or sale of certain TFC portfolios and businesses; (v) uncertainty in estimating market value of TFC’s receivables held for sale and reserves for TFC’s receivables to be retained; (w) uncertainty in estimating contingent liabilities and establishing reserves to address such contingencies; (x) risks and uncertainties related to acquisitions and dispositions, including difficulties or unanticipated expenses in connection with the consummation of acquisitions or dispositions, the disruption of current plans and operations, or the failure to achieve anticipated synergies and opportunities; (y) the efficacy of research and development investments to develop new products; (z) the launching of significant new products or programs which could result in unanticipated expenses; (aa) bankruptcy or other financial problems at major suppliers or customers that could cause disruptions in our supply chain or difficulty in collecting amounts owed by such customers; and (bb) continued volatility and further deterioration of the capital markets.
 
 
 

The following information was filed by Textron Inc (TXT) on Thursday, January 29, 2009 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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