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Textron Adjusts Business Jet Outlook

^{Published on 2010-09-21 06:05:41 - Market Wire}
 

PROVIDENCE, R.I.--([ BUSINESS WIRE ])--Textron Inc. (NYSE: TXT) today reported that it is adjusting aircraft production schedules and reducing headcount at its Cessna business unit due to continued weakness in new aircraft orders.

"Therefore, we are taking further production and restructuring actions at Cessna."

aWhile we are seeing solid performance in most of our other businesses, we have not yet seen a discernable improvement in business jet order activity,a said Textron chairman and chief executive officer Scott C. Donnelly. aTherefore, we are taking further production and restructuring actions at Cessna.a

The company still expects 2010 earnings per share from continuing operations excluding special charges to be in the range of $0.55 to $0.65. Manufacturing free cash flow from continuing operations for the year is now expected to be approximately $400 million, compared to a previous target of $500 - $550 million, reflecting lower expected jet deliveries.

Higher finance receivable liquidations at Textron Financial should more than offset the lower expected cash from manufacturing operations, as the company now expects to reduce receivables by $2.4 billion this year, up from its previous target of $2.0 billion and its original target of $1.6 billion. During the third quarter, the company repaid the $665 million balance remaining on the Textron Inc. $1.25 billion bank line. The company continues to be on track to reduce net debt below $5.5 billion by the end of the year.

Textron plans to issue third quarter financial results on Wednesday, October 20, 2010 and will host a conference call at 8:00 a.m. (Eastern) to discuss results and the companya™s 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) 332-0226 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 20, 2010 by dialing (320) 365-3844; Access Code: 138125.

Non-GAAP Measures

Earnings 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.

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 ].

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 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. Governmenta™s ability to unilaterally modify or terminate its contracts with us for the U.S. Governmenta™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 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 export 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 and other postretirement employee costs; (s) our Finance segmenta™s ability to maintain portfolio credit quality; (t) Textron Financial Corporationa™s (aTFCa) ability to maintain certain minimum levels of financial performance required under its committed bank lines of credit and under Textrona™s support agreement with TFC; (u) our Finance segmenta™s access to financing including securitizations at competitive rates; (v) our ability to successfully exit from TFCa™s commercial finance business, other than the captive finance business; (w) uncertainty in estimating market value of TFCa™s receivables held for sale and reserves for TFCa™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 dispositions, 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 customersa™ 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.

Textron Inc.

GAAP to Non-GAAP Reconciliations

Earnings Per Share from Continuing Operations, Excluding Special Charges

A reconciliation of earnings from continuing operations in accordance with GAAP (Generally Accepted Accounting Principles) to earnings per share from continuing operations, excluding special charges on a non-GAAP basis is provided below.

Earnings per share from continuing operations, excluding special charges 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 companya™s results before special charges should be used only in conjunction with data presented in accordance with GAAP.

Free cash flow is a measure generally used by investors, analysts and management to gauge a companya™s ability to generate cash from operations in excess of that necessary to be reinvested to sustain and grow the business. Our definition of manufacturing free cash flow uses net cash from operating activities of continuing operations, adjusted for dividends received from TFC, capital contributions provided under the Support Agreement, capital expenditures, and proceeds from the sale of plant, property and equipment. We believe that our manufacturing free cash flow calculation provides a relevant measure of liquidity and a useful basis for assessing our ability to fund operations. This measure is not a financial measure under GAAP and should be used in conjunction with data presented in accordance with GAAP. Our manufacturing free cash flow measure may not be comparable to similarly titled measures reported by other companies, as there is no definitive accounting standard on how the measure should be calculated.