Exhibit 99.1
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| Corporate Communications |
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| NEWS Release |
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Investor Contacts: |
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Doug Wilburne – 401-457-2288 | FOR IMMEDIATE RELEASE |
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Media Contact: |
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David Sylvestre – 401-457-2362 |
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Textron Reports Third Quarter Earnings from Continuing Operations of
Providence, Rhode Island – October 17, 2012 – Textron Inc. (NYSE: TXT) today reported third quarter 2012 income from continuing operations of $0.48 per share, up 6.7% from $0.45 per share in the third quarter of 2011. Total revenues in the quarter were $3.0 billion, up 6.6% from the third quarter of 2011.
Manufacturing segment profit was $254 million compared to $260 million in the third quarter of 2011. Manufacturing cash flow before pension contributions was $153 million during the third quarter compared to $339 million during last year’s third quarter. The company contributed $16 million to its pension plans during the third quarter.
“Third quarter results reflected strength in our helicopter and industrial units, favorable liquidation activity in our finance portfolio and good execution at Cessna in an environment of weak business jet demand, partially offset by lower overall volumes in our Textron Systems segment and charges associated with our new fee-for-service unmanned aerial systems programs,” said Textron Chairman and CEO Scott C. Donnelly.
Donnelly continued, “Through the first three quarters of the year, we have had strong results at Bell, Industrial and Finance relative to our original EPS outlook. Based on this performance and our outlook for the fourth quarter, we are raising our full-year EPS guidance.”
Outlook
Textron raised its 2012 earnings per share from continuing operations guidance from its previous range of $1.80 - $2.00 to a revised range of $1.95 to $2.05. The company also confirmed that cash flow from continuing operations of the manufacturing group before pension contributions is expected to be between $700 and $750 million, with planned pension contributions of about $200 million.
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Third Quarter Segment Results
Cessna
Revenues at Cessna increased $7 million as higher used aircraft sales more than offset a decline in new Citation jet deliveries. Cessna delivered 41 new Citations in the third quarter this year, down from 47 units in last year’s third quarter.
Segment profit of $30 million was down $3 million from a year ago.
Cessna backlog at the end of the third quarter was $1.3 billion, down $196 million from the second quarter of 2012.
Bell
Bell revenues increased $181 million in the third quarter from the same period in the prior year, primarily reflecting commercial deliveries of 46 units in the third quarter of 2012, compared to 26 helicopters in last year’s third quarter. Military deliveries included 11 V-22’s and 5 H-1’s compared to 9 V-22’s and 7 H-1’s in last year’s third quarter.
Segment profit increased $22 million, primarily reflecting higher volumes.
Bell backlog at the end of the second quarter was $6.3 billion, down $434 million from the second quarter of 2012.
Textron Systems
Revenues at Textron Systems decreased $62 million primarily due to lower volumes. Segment profit decreased $26 million, reflecting charges associated with new fee-for-service unmanned aerial system contracts and lower volumes.
Textron Systems’ backlog at the end of the third quarter was $2.9 billion, up $263 million from the second quarter of 2012.
Industrial
Industrial revenues increased $28 million reflecting higher volumes in our golf and turf and automotive businesses partially offset by unfavorable foreign exchange. Segment profit increased $1 million primarily due to the higher volume, partially offset by inflation that exceeded price increases.
Finance
Finance segment revenues increased $32 million compared to the third quarter of 2011. The segment reported a profit of $28 million compared to a $24 million loss in last year’s third quarter.
Conference Call Information
Textron will host its conference call today, October 17, 2012 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) 230-1059 in the U.S. or (612) 234-9959 outside of the U.S. (request the Textron Earnings Call).
| Textron Inc. 40 Westminster Street Providence, RI 02903-2596 (401) 421-2800 |
In addition, the call will be recorded and available for playback beginning at 10:30 a.m. (Eastern) on Wednesday October 17, 2012 by dialing (320) 365-3844 internationally; Access Code: 225827.
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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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; changes in worldwide economic or political conditions that impact demand for our products, interest rates or foreign exchange rates; 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; 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; our ability to access the capital markets at reasonable rates; performance issues with key suppliers, subcontractors or business partners; legislative or regulatory actions 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; 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; increases in pension expenses or employee and retiree medical benefits; uncertainty in estimating reserves, including reserves established to address contingent liabilities, unrecognized tax benefits, or potential losses on our Finance segment’s receivables; difficult conditions in the financial markets which may adversely impact
| Textron Inc. 40 Westminster Street Providence, RI 02903-2596 (401) 421-2800 |
our customers’ ability to fund or finance purchases of our products; and volatility in the global economy resulting in demand softness or volatility in the markets in which we do business.
| Textron Inc. 40 Westminster Street Providence, RI 02903-2596 (401) 421-2800 |
TEXTRON INC.
Revenues by Segment and Reconciliation of Segment Profit to Net Income
Three and Nine Months Ended September 29, 2012 and October 1, 2011
(Dollars in millions, except per share amounts)
(Unaudited)
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| Three Months Ended |
| Nine Months Ended | ||||||||||||||||||
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| September 29, 2012 |
| October 1, 2011 |
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| September 29, 2012 |
| October 1, 2011 |
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REVENUES |
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MANUFACTURING: |
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Cessna |
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| $ | 778 |
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| $ | 771 |
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| $ | 2,210 |
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| $ | 1,979 |
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Bell |
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| 1,075 |
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| 894 |
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| 3,125 |
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| 2,515 |
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Textron Systems |
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| 400 |
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| 462 |
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| 1,166 |
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| 1,359 |
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Industrial |
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| 683 |
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| 655 |
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| 2,194 |
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| 2,077 |
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| 2,936 |
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| 2,782 |
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| 8,695 |
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| 7,930 |
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FINANCE |
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| 64 |
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| 32 |
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| 180 |
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| 91 |
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Total revenues |
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| $ | 3,000 |
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| $ | 2,814 |
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| $ | 8,875 |
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| $ | 8,021 |
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SEGMENT PROFIT |
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MANUFACTURING: |
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Cessna |
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| $ | 30 |
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| $ | 33 |
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| $ | 59 |
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| $ | - |
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Bell |
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| 165 |
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| 143 |
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| 462 |
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| 354 |
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Textron Systems |
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| 21 |
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| 47 |
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| 96 |
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| 149 |
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Industrial |
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| 38 |
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| 37 |
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| 172 |
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| 153 |
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| 254 |
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| 260 |
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| 789 |
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| 656 |
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FINANCE |
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| 28 |
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| (24 | ) |
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| 62 |
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| (101 | ) |
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Segment Profit |
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| 282 |
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| 236 |
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| 851 |
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| 555 |
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Corporate expenses and other, net |
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| (38 | ) |
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| (13 | ) |
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| (105 | ) |
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| (75 | ) |
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Interest expense, net for Manufacturing group |
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| (35 | ) |
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| (37 | ) |
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| (105 | ) |
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| (113 | ) |
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Income from continuing operations before income taxes |
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| 209 |
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| 186 |
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| 641 |
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| 367 |
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Income tax expense |
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| (67 | ) |
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| (50 | ) |
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| (206 | ) |
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| (108 | ) |
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Income from continuing operations |
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| 142 |
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| 136 |
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| 435 |
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| 259 |
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Discontinued operations, net of income taxes |
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| 9 |
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| 6 |
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| 6 |
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| 2 |
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Net Income |
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| $ | 151 |
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| $ | 142 |
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| $ | 441 |
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| $ | 261 |
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Earnings per share: |
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Income from continuing operations |
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| $ | 0.48 |
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| $ | 0.45 |
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| $ | 1.47 |
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| $ | 0.83 |
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Discontinued operations, net of income taxes |
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| 0.03 |
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| 0.02 |
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| 0.02 |
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| - |
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Net income |
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| $ | 0.51 |
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| $ | 0.47 |
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| $ | 1.49 |
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| $ | 0.83 |
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Diluted average shares outstanding |
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| 296,920,000 |
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| 300,866,000 |
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| 295,697,000 |
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| 312,754,000 |
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Textron Inc.
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)
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| September 29, |
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| December 31, |
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Assets |
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Cash and equivalents |
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| $ | 1,232 |
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| $ | 871 |
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Accounts receivable, net |
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| 914 |
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| 856 |
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Inventories |
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| 2,831 |
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| 2,402 |
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Other current assets |
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| 549 |
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| 1,134 |
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Net property, plant and equipment |
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| 2,078 |
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| 1,996 |
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Other assets |
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| 3,066 |
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| 3,143 |
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Finance group assets |
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| 2,395 |
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| 3,213 |
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Total Assets |
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| $ | 13,065 |
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| $ | 13,615 |
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Liabilities and Shareholders’ Equity |
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Current portion of long-term debt |
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| $ | 521 |
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| $ | 146 |
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Other current liabilities |
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| 2,694 |
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| 2,785 |
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Other liabilities |
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| 2,679 |
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| 2,826 |
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Long-term debt |
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| 1,817 |
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| 2,313 |
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Finance group liabilities |
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| 2,046 |
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| 2,800 |
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Total Liabilities |
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| 9,757 |
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| 10,870 |
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Total Shareholders’ Equity |
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| 3,308 |
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| 2,745 |
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Total Liabilities and Shareholders’ Equity |
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| $ | 13,065 |
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| $ | 13,615 |
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TEXTRON INC.
MANUFACTURING GROUP
Condensed Schedule of Cash Flows and Manufacturing Cash Flow GAAP to Non-GAAP Reconciliations
(In millions)
(Unaudited)
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| Three Months Ended |
| Nine Months Ended | |||||||||
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| September 29, | October 1, |
| September 29, | October 1, | |||||||
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| 2012 | 2011 |
| 2012 | 2011 | |||||||
Cash flows from operating activities: |
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Income from continuing operations |
| $ | 127 |
| $ | 155 |
| $ | 394 |
| $ | 330 | |
Dividends received from TFC |
| 30 |
| - |
| 345 |
| 179 | |||||
Capital contributions paid to TFC |
| - |
| (40) |
| (240 | ) | (152) | |||||
Depreciation and amortization |
| 87 |
| 87 |
| 257 |
| 267 | |||||
Changes in working capital |
| (36 | ) | 140 |
| (401 | ) | (98) | |||||
Changes in other assets and liabilities and non-cash items |
| 108 |
| 31 |
| 42 |
| (7) | |||||
Net cash from operating activities of continuing operations |
| 316 |
| 373 |
| 397 |
| 519 | |||||
Cash flows from investing activities: |
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Capital expenditures |
| (156 | ) | (102) |
| (314 | ) | (271) | |||||
Other investing activities, net |
| (1 | ) | 12 |
| 1 |
| (30) | |||||
Net cash from investing activities |
| (157 | ) | (90) |
| (313 | ) | (301) | |||||
Cash flows from financing activities: |
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Increase in short-term debt |
| - |
| 38 |
| - |
| 227 | |||||
Principal payments on long-term debt |
| - |
| - |
| (139 | ) | (13) | |||||
Proceeds from issuance of long-term debt |
| - |
| 496 |
| - |
| 496 | |||||
Net intergroup borrowings |
| 173 |
| 120 |
| 418 |
| (275) | |||||
Dividends paid |
| (6 | ) | (6) |
| (17 | ) | (17) | |||||
Other financing activities, net |
| 4 |
| (17) |
| 15 |
| (18) | |||||
Net cash from financing activities |
| 171 |
| 631 |
| 277 |
| 400 | |||||
Total cash flows from continuing operations |
| 330 |
| 914 |
| 361 |
| 618 | |||||
Total cash flows from discontinued operations |
| (2 | ) | (1) |
| (5 | ) | (3) | |||||
Effect of exchange rate changes on cash and equivalents |
| 6 |
| (6) |
| 5 |
| 4 | |||||
Net change in cash and equivalents |
| 334 |
| 907 |
| 361 |
| 619 | |||||
Cash and equivalents at beginning of period |
| 898 |
| 610 |
| 871 |
| 898 | |||||
Cash and equivalents at end of period |
| $ | 1,232 |
| $ | 1,517 |
| $ | 1,232 |
| $ | 1,517 | |
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Manufacturing Cash Flow GAAP to Non-GAAP Reconciliations: |
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Net cash from operating activities of continuing operations - GAAP |
| $ | 316 |
| $ | 373 |
| $ | 397 |
| $ | 519 | |
Less: | Capital expenditures |
| (156 | ) | (102) |
| (314 | ) | (271) | ||||
| Dividends received from TFC |
| (30 | ) | - |
| (345 | ) | (179) | ||||
Plus: | Capital contributions paid to TFC |
| - |
| 40 |
| 240 |
| 152 | ||||
| Proceeds on sale of property, plant and equipment |
| 7 |
| 12 |
| 9 |
| 13 | ||||
| Total pension contributions |
| 16 |
| 16 |
| 181 |
| 221 | ||||
Manufacturing cash flow before pension contributions- Non-GAAP |
| $ | 153 |
| $ | 339 |
| $ | 168 |
| $ | 455 | |
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| 2012 Outlook | ||||||
Net cash from operating activities of continuing operations - GAAP |
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| $ 1,055 - $ 1,105 | |||||||
Less: | Capital expenditures |
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| (450) | ||||||
| Dividends received from TFC |
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| (345) | ||||||
Plus: | Capital contributions paid to TFC |
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| 240 | ||||||
| Total pension contributions |
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| 200 | ||||||
Manufacturing cash flow before pension contributions- Non-GAAP |
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| $ 700 - $ 750 | |||||||
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)
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| Three Months Ended |
| Nine Months Ended | ||||||||
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| September 29, | October 1, |
| September 29, | October 1, | ||||||
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| 2012 | 2011 |
| 2012 | 2011 | ||||||
Cash flows from operating activities: |
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Income from continuing operations |
| $ | 142 |
| $ | 136 |
| $ | 435 |
| $ | 259 |
Depreciation and amortization |
| 94 |
| 94 |
| 277 |
| 289 | ||||
Changes in working capital |
| 49 |
| 193 |
| (353 | ) | 44 | ||||
Changes in other assets and liabilities and non-cash items |
| 89 |
| 21 |
| 43 |
| 71 | ||||
Net cash from operating activities of continuing operations |
| 374 |
| 444 |
| 402 |
| 663 | ||||
Cash flows from investing activities: |
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Finance receivables originated or purchased |
| (3 | ) | (39) |
| (22 | ) | (149) | ||||
Finance receivables repaid |
| 142 |
| 243 |
| 478 |
| 665 | ||||
Proceeds on receivable sales |
| 44 |
| 19 |
| 113 |
| 276 | ||||
Capital expenditures |
| (156 | ) | (102) |
| (314 | ) | (271) | ||||
Proceeds from sale of repossessed assets and properties |
| 23 |
| 5 |
| 71 |
| 77 | ||||
Other investing activities, net |
| (17 | ) | 21 |
| 13 |
| 50 | ||||
Net cash from investing activities |
| 33 |
| 147 |
| 339 |
| 648 | ||||
Cash flows from financing activities: |
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Principal payments on long-term and nonrecourse debt |
| (81 | ) | (132) |
| (474 | ) | (643) | ||||
Proceeds from issuance of long-term debt |
| - |
| 526 |
| 88 |
| 791 | ||||
Repayment of borrowings under line of credit facilities |
| - |
| (100) |
| - |
| (1,040) | ||||
Increase in short-term debt |
| - |
| 38 |
| - |
| 227 | ||||
Dividends paid |
| (6 | ) | (6) |
| (17 | ) | (17) | ||||
Other financing activities, net |
| 3 |
| (17) |
| 15 |
| (18) | ||||
Net cash from financing activities |
| (84 | ) | 309 |
| (388 | ) | (700) | ||||
Total cash flows from continuing operations |
| 323 |
| 900 |
| 353 |
| 611 | ||||
Total cash flows from discontinued operations |
| (2 | ) | (1) |
| (5 | ) | (3) | ||||
Effect of exchange rate changes on cash and equivalents |
| 6 |
| (8) |
| 5 |
| 3 | ||||
Net change in cash and equivalents |
| 327 |
| 891 |
| 353 |
| 611 | ||||
Cash and equivalents at beginning of period |
| 911 |
| 651 |
| 885 |
| 931 | ||||
Cash and equivalents at end of period |
| $ | 1,238 |
| $ | 1,542 |
| $ | 1,238 |
| $ | 1,542 |