| 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 Contacts: Karen Gordon Quintal – 401-457-2362 Michael Maynard – 401-457-2474 | |
Textron Reports $0.27 Earnings per Share from Continuing Operations for Second Quarter 2010 Further Reduces Managed Finance Receivables by $674 Million Increases 2010 Earnings Outlook |
Providence, Rhode Island – July 21, 2010 – Textron Inc. (NYSE: TXT) today reported second quarter earnings from continuing operations of $0.27 per share, compared to a $0.23 per share loss in last year’s second quarter. Excluding special charges, the company reported income from continuing operations of $0.29 per share, compared to $0.08 per share a year ago. Revenues in the quarter were $2.7 billion, up 3.7 percent from last year’s second quarter and manufacturing operations generated $170 million in free cash flow during the quarter.
“Solid manufacturing performance in the quarter reflected our lower cost structure, good operational execution and the ramp-up in our military programs at Bell,” said Textron President and CEO Scott C. Donnelly
“Furthermore, we continued to execute our finance receivable reduction plan, reducing managed receivables by $674 million during the quarter,” Donnelly added.
Outlook
Donnelly remarked, “Our sustained focus on operating productivity and ongoing investments in our businesses should position us well for this cycle.”
Textron is increasing its forecast of 2010 earnings per share from continuing operations excluding special charges to $0.55 to $0.65 from $0.30 to $0.50, while maintaining its outlook for free cash flow from continuing operations of the manufacturing group in the range of $500 - $550 million. The company also now expects 2010 finance receivables liquidations will be $2.0 billion, up from its previous target of $1.8 billion.
Second Quarter Segment Results
Cessna
Cessna’s revenues decreased $236 million in the second quarter, primarily reflecting lower new aircraft deliveries, including 43 jets compared with 84 jets in the corresponding period last year. These decreases were partially offset by higher aftermarket and used aircraft volumes.
Segment profit decreased $45 million due to the lower volume and a reduction in deposit forfeiture income, partially offset by lower used aircraft write-downs, inventory reserves and selling and administrative expenses.
Cessna backlog ended the second quarter at $3.7 billion, down $400 million from the end of the first quarter.
Bell
Bell’s revenues increased $153 million in the second quarter, reflecting higher V-22 and H-1 deliveries and higher spares and support volume, partially offset by lower commercial aircraft volume.
Segment profit increased $36 million due to improved performance, higher military volume and commercial aircraft pricing in excess of inflation. The improved performance reflects recognition of expected reimbursements for prior-period H-1 and V-22 program costs and the non-recurrence of costs related to the termination of certain commercial models in 2009.
Bell backlog increased $200 million from the end of first quarter to $7.1 billion.
Textron Systems
Revenues increased $57 million primarily due to higher Unmanned Aircraft Systems volume.
Segment profit increased $15 million due to the impact of higher volume and improved performance.
Textron Systems’ backlog at the end of the second quarter was $1.6 billion, an increase of $200 million from the end of the first quarter.
Industrial
Revenues increased $153 million due to higher volumes, partially offset by an unfavorable foreign exchange impact.
Segment profit increased $39 million due to higher volumes and improved cost performance, partially offset by higher inflation.
Finance
Finance revenues decreased $30 million largely due to the non-recurrence of last year’s gains on debt extinguishment and lower average finance receivables, partially offset by reduced portfolio losses.
Finance segment loss improved $28 million reflecting lower loan loss provisions, portfolio losses and selling and administrative expenses, partially offset by the non-recurrence of gains on debt extinguishment and the impact of lower average finance receivables.
Since the end of last quarter, sixty-day plus delinquencies of finance receivables held for investment decreased to $385 million from $515 million and nonaccrual finance receivables decreased to $876 million from $1.03 billion. Net charge-offs in the second quarter were $57 million compared with $31 million in the first quarter of 2010.
Managed receivables ended the second quarter at $5.6 billion, down from $6.3 billion at the end of last quarter.
Non-GAAP Measures
Income from continuing operations, excluding special charges and manufacturing free cash flow are non-GAAP measures that are defined and reconciled to GAAP in attachments to this release.
Conference Call Information
Textron will host its conference call today, July 21, 2010 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) 230-1085 in the U.S. or (612) 288-0329 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 21, 2010 by dialing (320) 365-3844; Access Code: 138124.
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.
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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, such as the Risk Factors contained in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q and including the following: (a) changes in worldwide economic and political conditions that impact demand for our pro ducts, 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 Overseas Contingency Operations; (g) changes in national or international funding priorities, U.S. and foreign military budget constraints and determinations, and government policies on the e xport and import of military and commercial products; (h) legislative or regulatory actions impacting our operations or demand for our products; (i) the ability to control costs and successful implementation of various cost-reduction programs; (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 in which our Finance segment holds receivables; (l) changes in aircraft delivery schedules or cancellation or deferrals 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 an d other postretirement employee costs; (s) our Finance segment’s ability to maintain portfolio credit quality; (t) Textron Financial Corporation’s (“TFC”) ability to maintain certain minimum levels of financial performance required under its committed bank lines of credit and under Textron’s support agreement with TFC; (u) our Finance segment’s access to financing including securitizations at competitive rates; (v) our ability to successfully exit from TFC’s commercial finance business, other than the captive finance business; (w) uncertainty in estimating market value of TFC’s receivables held for sale and reserves for TFC’s receivables to be retained; (x) uncertainty in estimating contingent liabilities and unrecognized tax benefits and establishing reserves to address such items; (y) risks and uncertainties related to acquisitions and dispositions, including difficulties or unanticipated expenses in connection with the consummation of acquisitions or d ispositions, the disruption of current plans and operations, or the failure to achieve anticipated synergies and opportunities; (z) the efficacy of research and development investments to develop new products; (aa) the launching of significant new products or programs which could result in unanticipated expenses; (bb) 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; (cc) difficult conditions in the financial markets which may adversely impact our customers’ ability to fund or finance purchases of our products; and (dd) continued volatility in the economy resulting in a prolonged downturn in the markets in which we do business.
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Textron Inc.
A reconciliation of income from continuing operations, excluding special charges, per share on a non-GAAP (Generally Accepted Accounting Principles) basis to income (loss) from continuing operations per share in accordance with GAAP is provided below.
Income from continuing operations, excluding special charges, on a per share basis is a non-GAAP financial measure. Special charges include items that are either isolated or temporary in nature and are excluded from segment profit. Results before special charges are also the basis for measuring operating performance for management compensation purposes. It is helpful to understand results without these charges, especially when comparing results to previous periods. However, analysis of the company’s results before special charges should be used only in conjunction with data presented in accordance with GAAP.
For the three- and six-month periods ended July 4, 2009, Income (loss) from continuing operations – GAAP and the non-GAAP per share information are calculated using basic shares outstanding due to the anti-dilutive impact of the loss from continuing operations.
