tenq.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_______________
FORM
10-Q
[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the fiscal quarter ended March 29, 2008
|
|
OR
|
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Commission
File Number: 1-5480
Textron
Inc.
(Exact
name of registrant as specified in its charter)
Delaware
|
|
05-0315468
|
(State
or other jurisdiction of
|
|
(I.R.S.
Employer
|
incorporation
or organization)
|
|
Identification
No.)
|
|
|
|
40
Westminster Street, Providence, RI
|
|
02903
|
(Address
of principal executive offices)
|
|
(zip
code)
|
Registrant’s
Telephone Number, Including Area Code: (401) 421-2800
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days. Yes ü No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “Large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer [ ü
] Accelerated
filer [
]
Non-accelerated
filer [
] Smaller
reporting company [
]
(Do not
check if a smaller reporting company)
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes No ü
Common
stock outstanding at April 12, 2008 - 249,238,655 shares
INDEX
|
|
Page
|
PART
I.
|
FINANCIAL
INFORMATION |
|
|
|
|
|
Item
1.
|
Financial
Statements
|
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
7
|
Item
2.
|
|
16
|
Item
3.
|
|
24
|
Item
4.
|
|
24
|
|
|
|
PART
II.
|
OTHER INFORMATION
|
|
|
|
|
|
Item
2.
|
|
25
|
Item
6.
|
|
25
|
|
|
26
|
|
|
|
TEXTRON
INC.
(In
millions, except per share amounts)
|
|
Three
Months Ended
|
|
|
|
March
29,
2008
|
|
|
March
31,
2007
|
|
Revenues
|
|
|
|
|
|
|
Manufacturing
|
|
$ |
3,304 |
|
|
$ |
2,754 |
|
Finance
|
|
|
214 |
|
|
|
210 |
|
Total
revenues
|
|
|
3,518 |
|
|
|
2,964 |
|
Costs,
expenses and other
|
|
|
|
|
|
|
|
|
Cost
of sales
|
|
|
2,594 |
|
|
|
2,180 |
|
Selling
and administrative
|
|
|
429 |
|
|
|
372 |
|
Interest
expense, net
|
|
|
115 |
|
|
|
123 |
|
Provision
for losses on finance receivables
|
|
|
27 |
|
|
|
5 |
|
Total costs, expenses
and other
|
|
|
3,165 |
|
|
|
2,680 |
|
Income
from continuing operations before income taxes
|
|
|
353 |
|
|
|
284 |
|
Income
taxes
|
|
|
(117 |
) |
|
|
(86 |
) |
Income
from continuing operations
|
|
|
236 |
|
|
|
198 |
|
Loss
from discontinued operations, net of income taxes
|
|
|
(5 |
) |
|
|
(2 |
) |
Net
income
|
|
$ |
231 |
|
|
$ |
196 |
|
Basic
earnings per share
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
0.95 |
|
|
$ |
0.79 |
|
Discontinued
operations
|
|
|
(0.02 |
) |
|
|
(0.01 |
) |
Basic earnings per
share
|
|
$ |
0.93 |
|
|
$ |
0.78 |
|
Diluted
earnings per share
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
0.93 |
|
|
$ |
0.78 |
|
Discontinued
operations
|
|
|
(0.02 |
) |
|
|
(0.01 |
) |
Diluted earnings per
share
|
|
$ |
0.91 |
|
|
$ |
0.77 |
|
Dividends
per share
|
|
|
|
|
|
|
|
|
$2.08
Preferred stock, Series A
|
|
$ |
0.52 |
|
|
$ |
0.52 |
|
$1.40
Preferred stock, Series B
|
|
$ |
0.35 |
|
|
$ |
0.35 |
|
Common
stock
|
|
$ |
0.23 |
|
|
$ |
0.194 |
|
See
Notes to the consolidated financial statements.
(Dollars
in millions)
|
|
March
29,
2008
|
|
|
December
29,
2007
|
|
Assets
|
|
|
|
|
|
|
Manufacturing
group
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
314 |
|
|
$ |
471 |
|
Accounts
receivable, less allowance for doubtful accounts of $35 and
$34
|
|
|
1,181 |
|
|
|
1,083 |
|
Inventories
|
|
|
3,074 |
|
|
|
2,724 |
|
Other
current assets
|
|
|
483 |
|
|
|
568 |
|
Total current
assets
|
|
|
5,052 |
|
|
|
4,846 |
|
Property,
plant and equipment, less accumulated
depreciation and
amortization of $2,475 and $2,388
|
|
|
2,001 |
|
|
|
1,999 |
|
Goodwill
|
|
|
2,152 |
|
|
|
2,132 |
|
Other
assets
|
|
|
1,598 |
|
|
|
1,596 |
|
Total Manufacturing
group assets
|
|
|
10,803 |
|
|
|
10,573 |
|
Finance
group
|
|
|
|
|
|
|
|
|
Cash
|
|
|
47 |
|
|
|
60 |
|
Finance
receivables, less allowance for losses of $105 and $89
|
|
|
8,634 |
|
|
|
8,514 |
|
Goodwill
|
|
|
169 |
|
|
|
169 |
|
Other
assets
|
|
|
1,113 |
|
|
|
640 |
|
Total Finance group
assets
|
|
|
9,963 |
|
|
|
9,383 |
|
Total
assets
|
|
$ |
20,766 |
|
|
$ |
19,956 |
|
Liabilities
and shareholders’ equity
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Manufacturing
group
|
|
|
|
|
|
|
|
|
Current
portion of long-term debt and short-term debt
|
|
$ |
385 |
|
|
$ |
355 |
|
Accounts
payable
|
|
|
1,082 |
|
|
|
927 |
|
Accrued
liabilities
|
|
|
2,789 |
|
|
|
2,840 |
|
Total current
liabilities
|
|
|
4,256 |
|
|
|
4,122 |
|
Other
liabilities
|
|
|
2,165 |
|
|
|
2,289 |
|
Long-term
debt
|
|
|
1,801 |
|
|
|
1,793 |
|
Total Manufacturing
group liabilities
|
|
|
8,222 |
|
|
|
8,204 |
|
Finance
group
|
|
|
|
|
|
|
|
|
Other
liabilities
|
|
|
540 |
|
|
|
462 |
|
Deferred
income taxes
|
|
|
474 |
|
|
|
472 |
|
Debt
|
|
|
7,936 |
|
|
|
7,311 |
|
Total Finance group
liabilities
|
|
|
8,950 |
|
|
|
8,245 |
|
Total
liabilities
|
|
|
17,172 |
|
|
|
16,449 |
|
Shareholders’
equity
|
|
|
|
|
|
|
|
|
Capital
stock:
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
2 |
|
|
|
2 |
|
Common
stock
|
|
|
32 |
|
|
|
32 |
|
Capital
surplus
|
|
|
1,201 |
|
|
|
1,193 |
|
Retained
earnings
|
|
|
2,940 |
|
|
|
2,766 |
|
Accumulated
other comprehensive loss
|
|
|
(424 |
) |
|
|
(400 |
) |
|
|
|
3,751 |
|
|
|
3,593 |
|
Less
cost of treasury shares
|
|
|
157 |
|
|
|
86 |
|
Total
shareholders’ equity
|
|
|
3,594 |
|
|
|
3,507 |
|
Total
liabilities and shareholders’ equity
|
|
$ |
20,766 |
|
|
$ |
19,956 |
|
Common
shares outstanding (in thousands)
|
|
|
249,099 |
|
|
|
250,061 |
|
See
Notes to the consolidated financial statements.
For the
Three Months Ended March 29, 2008 and March 31, 2007, respectively
(In
millions)
|
|
Consolidated
|
|
|
|
2008
|
|
|
2007
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net
income
|
|
$ |
231 |
|
|
$ |
196 |
|
Less:
Loss from discontinued operations
|
|
|
(5 |
) |
|
|
(2 |
) |
Income
from continuing operations
|
|
|
236 |
|
|
|
198 |
|
Adjustments
to reconcile income from continuing operations to net cash
|
|
|
|
|
|
|
|
|
provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
|
Earnings of Finance
group, net of distributions
|
|
|
- |
|
|
|
- |
|
Depreciation and
amortization
|
|
|
103 |
|
|
|
74 |
|
Provision for losses
on finance receivables
|
|
|
27 |
|
|
|
5 |
|
Share-based
compensation
|
|
|
13 |
|
|
|
8 |
|
Deferred income
taxes
|
|
|
2 |
|
|
|
- |
|
Changes in assets and
liabilities excluding those related to acquisitions
|
|
|
|
|
|
|
|
|
and
divestitures:
|
|
|
|
|
|
|
|
|
Accounts receivable,
net
|
|
|
(78 |
) |
|
|
(111 |
) |
Inventories
|
|
|
(349 |
) |
|
|
(288 |
) |
Other
assets
|
|
|
86 |
|
|
|
33 |
|
Accounts
payable
|
|
|
144 |
|
|
|
81 |
|
Accrued and other
liabilities
|
|
|
(123 |
) |
|
|
(12 |
) |
Captive finance
receivables, net
|
|
|
59 |
|
|
|
(74 |
) |
Other operating
activities, net
|
|
|
5 |
|
|
|
21 |
|
Net
cash provided by (used in) operating activities of continuing
operations
|
|
|
125 |
|
|
|
(65 |
) |
Net
cash used in operating activities of discontinued
operations
|
|
|
(20 |
) |
|
|
(5 |
) |
Net
cash provided by (used in) operating activities
|
|
|
105 |
|
|
|
(70 |
) |
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Finance
receivables:
|
|
|
|
|
|
|
|
|
Originated or
purchased
|
|
|
(2,846 |
) |
|
|
(2,886 |
) |
Repaid
|
|
|
1,933 |
|
|
|
2,340 |
|
Proceeds on
receivables sales and securitization sales
|
|
|
372 |
|
|
|
591 |
|
Net
cash used in acquisitions
|
|
|
(100 |
) |
|
|
- |
|
Capital
expenditures
|
|
|
(84 |
) |
|
|
(61 |
) |
Proceeds
from sale of property, plant and equipment
|
|
|
1 |
|
|
|
1 |
|
Other
investing activities, net
|
|
|
8 |
|
|
|
14 |
|
Net
cash used in investing activities of continuing operations
|
|
|
(716 |
) |
|
|
(1 |
) |
Net
cash provided by investing activities of discontinued
operations
|
|
|
- |
|
|
|
17 |
|
Net
cash (used in) provided by investing activities
|
|
|
(716 |
) |
|
|
16 |
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Increase
(decrease) in short-term debt
|
|
|
718 |
|
|
|
(720 |
) |
Proceeds
from issuance of long-term debt
|
|
|
424 |
|
|
|
874 |
|
Principal
payments and retirements of long-term debt
|
|
|
(561 |
) |
|
|
(102 |
) |
Proceeds
from option exercises
|
|
|
6 |
|
|
|
26 |
|
Purchases
of Textron common stock
|
|
|
(96 |
) |
|
|
(171 |
) |
Dividends
paid
|
|
|
(57 |
) |
|
|
(49 |
) |
Dividends
paid to Manufacturing group
|
|
|
- |
|
|
|
- |
|
Net
cash provided by (used in) financing activities of continuing
operations
|
|
|
434 |
|
|
|
(142 |
) |
Effect
of exchange rate changes on cash and cash equivalents
|
|
|
7 |
|
|
|
1 |
|
Net
decrease in cash and cash equivalents
|
|
|
(170 |
) |
|
|
(195 |
) |
Cash
and cash equivalents at beginning of period
|
|
|
531 |
|
|
|
780 |
|
Cash
and cash equivalents at end of period
|
|
$ |
361 |
|
|
$ |
585 |
|
See
Notes to the consolidated financial statements.
Consolidated
Statements of Cash Flows (Unaudited) (Continued)
For the
Three Months Ended March 29, 2008 and March 31, 2007, respectively
(In
millions)
|
|
Manufacturing
Group*
|
|
|
Finance
Group*
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Cash flows
from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
231 |
|
|
$ |
196 |
|
|
$ |
31 |
|
|
$ |
35 |
|
Less:
Loss from discontinued operations
|
|
|
(5 |
) |
|
|
(2 |
) |
|
|
- |
|
|
|
- |
|
Income
from continuing operations
|
|
|
236 |
|
|
|
198 |
|
|
|
31 |
|
|
|
35 |
|
Adjustments
to reconcile income from continuing operations to net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings of Finance
group, net of distributions
|
|
|
111 |
|
|
|
100 |
|
|
|
- |
|
|
|
- |
|
Depreciation and
amortization
|
|
|
93 |
|
|
|
65 |
|
|
|
10 |
|
|
|
9 |
|
Provision for losses
on finance receivables
|
|
|
- |
|
|
|
- |
|
|
|
27 |
|
|
|
5 |
|
Share-based
compensation
|
|
|
13 |
|
|
|
8 |
|
|
|
- |
|
|
|
- |
|
Deferred income
taxes
|
|
|
- |
|
|
|
(2 |
) |
|
|
2 |
|
|
|
2 |
|
Changes in assets and
liabilities excluding those related to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
acquisitions
and divestitures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable,
net
|
|
|
(78 |
) |
|
|
(111 |
) |
|
|
- |
|
|
|
- |
|
Inventories
|
|
|
(342 |
) |
|
|
(276 |
) |
|
|
- |
|
|
|
- |
|
Other
assets
|
|
|
80 |
|
|
|
33 |
|
|
|
1 |
|
|
|
- |
|
Accounts
payable
|
|
|
144 |
|
|
|
81 |
|
|
|
- |
|
|
|
- |
|
Accrued and other
liabilities
|
|
|
(111 |
) |
|
|
(21 |
) |
|
|
(12 |
) |
|
|
9 |
|
Captive finance
receivables, net
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Other operating
activities, net
|
|
|
12 |
|
|
|
11 |
|
|
|
(7 |
) |
|
|
9 |
|
Net
cash provided by operating activities of continuing
operations
|
|
|
158 |
|
|
|
86 |
|
|
|
52 |
|
|
|
69 |
|
Net
cash used in operating activities of discontinued
operations
|
|
|
(20 |
) |
|
|
(5 |
) |
|
|
- |
|
|
|
- |
|
Net
cash provided by operating activities
|
|
|
138 |
|
|
|
81 |
|
|
|
52 |
|
|
|
69 |
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originated or
purchased
|
|
|
- |
|
|
|
- |
|
|
|
(3,033 |
) |
|
|
(3,111 |
) |
Repaid
|
|
|
- |
|
|
|
- |
|
|
|
2,092 |
|
|
|
2,469 |
|
Proceeds on
receivables sales and securitization sales
|
|
|
- |
|
|
|
- |
|
|
|
459 |
|
|
|
613 |
|
Net
cash used in acquisitions
|
|
|
(100 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Capital
expenditures
|
|
|
(81 |
) |
|
|
(59 |
) |
|
|
(3 |
) |
|
|
(2 |
) |
Proceeds
from sale of property, plant and equipment
|
|
|
1 |
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
Other
investing activities, net
|
|
|
(2 |
) |
|
|
- |
|
|
|
8 |
|
|
|
3 |
|
Net
cash used in investing activities of continuing operations
|
|
|
(182 |
) |
|
|
(58 |
) |
|
|
(477 |
) |
|
|
(28 |
) |
Net
cash provided by investing activities of discontinued
operations
|
|
|
- |
|
|
|
17 |
|
|
|
- |
|
|
|
- |
|
Net
cash used in investing activities
|
|
|
(182 |
) |
|
|
(41 |
) |
|
|
(477 |
) |
|
|
(28 |
) |
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in short-term debt
|
|
|
75 |
|
|
|
(42 |
) |
|
|
643 |
|
|
|
(678 |
) |
Proceeds
from issuance of long-term debt
|
|
|
- |
|
|
|
- |
|
|
|
424 |
|
|
|
874 |
|
Principal
payments and retirements of long-term debt
|
|
|
(48 |
) |
|
|
(1 |
) |
|
|
(513 |
) |
|
|
(101 |
) |
Proceeds
from option exercises
|
|
|
6 |
|
|
|
26 |
|
|
|
- |
|
|
|
- |
|
Purchases
of Textron common stock
|
|
|
(96 |
) |
|
|
(171 |
) |
|
|
- |
|
|
|
- |
|
Dividends
paid
|
|
|
(57 |
) |
|
|
(49 |
) |
|
|
- |
|
|
|
- |
|
Dividends paid to
Manufacturing
group
|
|
|
- |
|
|
|
- |
|
|
|
(142 |
) |
|
|
(135 |
) |
Net cash (used in)
provided by financing activities of continuing
operations
|
|
|
(120 |
) |
|
|
(237 |
) |
|
|
412 |
|
|
|
(40 |
) |
Effect
of exchange rate changes on cash and cash equivalents
|
|
|
7 |
|
|
|
1 |
|
|
|
- |
|
|
|
- |
|
Net
(decrease) increase in cash and cash equivalents
|
|
|
(157 |
) |
|
|
(196 |
) |
|
|
(13 |
) |
|
|
1 |
|
Cash
and cash equivalents at beginning of period
|
|
|
471 |
|
|
|
733 |
|
|
|
60 |
|
|
|
47 |
|
Cash
and cash equivalents at end of period
|
|
$ |
314 |
|
|
$ |
537 |
|
|
$ |
47 |
|
|
$ |
48 |
|
*Textron
is segregated into a Manufacturing group and a Finance group as described in
Note 1 to the consolidated financial statements. The Finance group’s pre-tax
income in excess of dividends paid is excluded from the Manufacturing group’s
cash flows. All significant transactions between the borrowing
groups have been eliminated from the consolidated column provided on page
5.
See
Notes to the consolidated financial statements.
TEXTRON
INC.
Note
1: Basis of Presentation
The
consolidated interim financial statements included in this quarterly report
should be read in conjunction with the consolidated financial statements
included in our Annual Report on Form 10-K for the year ended December 29,
2007. In the opinion of management, the interim financial statements
reflect all adjustments (consisting only of normal recurring adjustments) that
are necessary for the fair presentation of our consolidated financial position,
results of operations and cash flows for the interim periods
presented. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the full
year.
As
discussed in Note 10: Segment Information, we changed our segment structure
effective as of the beginning of fiscal 2008. Our segments now
include Cessna, Bell, Defense & Intelligence, Industrial and Finance. Prior
periods have been recast to reflect the new segment reporting
structure.
Our
financings are conducted through two separate borrowing groups. The
Manufacturing group consists of Textron Inc., consolidated with the entities
that operate in the Cessna, Bell, Defense & Intelligence and Industrial
segments, while the Finance group consists of the Finance segment, comprised of
Textron Financial Corporation and its subsidiaries. We designed this framework
to enhance our borrowing power by separating the Finance group. Our
Manufacturing group operations include the development, production and delivery
of tangible goods and services, while our Finance group provides financial
services. Due to the fundamental differences between each borrowing group’s
activities, investors, rating agencies and analysts use different measures to
evaluate each group’s performance. To support those evaluations, we present
balance sheet and cash flow information for each borrowing group within the
consolidated financial statements. All significant intercompany
transactions are eliminated from the consolidated financial statements,
including retail and wholesale financing activities for inventory sold by our
Manufacturing group that is financed by our Finance group.
In July
2007, our Board of Directors approved a two-for-one split of our common stock
which was effected in August 2007. The prior period financial
statements have been restated to reflect the effect of the split on share and
per share amounts.
Note
2: Inventories
(In
millions)
|
|
March
29,
2008
|
|
|
December
29,
2007
|
|
Finished
goods
|
|
$ |
912 |
|
|
$ |
762 |
|
Work
in process
|
|
|
1,900 |
|
|
|
1,868 |
|
Raw
materials
|
|
|
742 |
|
|
|
636 |
|
|
|
|
3,554 |
|
|
|
3,266 |
|
Less
progress/milestone payments
|
|
|
480 |
|
|
|
542 |
|
|
|
$ |
3,074 |
|
|
$ |
2,724 |
|
Note 3: Comprehensive
Income
Our
comprehensive income for the periods is provided below:
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29,
2008
|
|
|
March
31,
2007
|
|
Net
income
|
|
$ |
231 |
|
|
$ |
196 |
|
Other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Recognition of prior service
cost and unrealized losses on
pension and postretirement
benefits
|
|
|
10 |
|
|
|
15 |
|
Deferred losses on hedge
contracts
|
|
|
(16 |
) |
|
|
(4 |
) |
Other
|
|
|
(18 |
) |
|
|
2 |
|
Comprehensive
income
|
|
$ |
207 |
|
|
$ |
209 |
|
Note
4: Earnings per Share
We
calculate basic and diluted earnings per share based on income available to
common shareholders, which approximates net income for each
period. We use the weighted-average number of common shares
outstanding during the period for the computation of basic earnings per share.
Diluted earnings per share includes the dilutive effect of convertible preferred
shares, stock options and restricted stock units in the weighted-average number
of common shares outstanding.
The
weighted-average shares outstanding for basic and diluted earnings per share are
as follows:
|
|
Three
Months Ended
|
|
(In
thousands)
|
|
March
29,
2008
|
|
|
March
31,
2007
|
|
Basic
weighted-average shares outstanding
|
|
|
249,158 |
|
|
|
250,095 |
|
Dilutive
effect of convertible preferred shares, stock options and
restricted
stock units
|
|
|
5,190 |
|
|
|
4,778 |
|
Diluted
weighted-average shares outstanding
|
|
|
254,348 |
|
|
|
254,873 |
|
Note
5: Share-Based Compensation
The
compensation expense we recorded in net income for our share-based compensation
plans is as follows:
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29,
2008
|
|
|
March
31,
2007
|
|
Compensation
expense, net of hedge income or expense
|
|
$ |
6 |
|
|
$ |
13 |
|
Income
tax expense (benefit)
|
|
|
11 |
|
|
|
(2 |
) |
Total
net compensation cost included in net income
|
|
$ |
17 |
|
|
$ |
11 |
|
Stock
Options
The stock
option compensation cost calculated under the fair value approach is recognized
over the vesting period of the stock options. The weighted-average
fair value of options granted per share was $14 in the first quarter of both
2008 and 2007. We estimate the fair value of options granted on the date of
grant using the Black-Scholes option-pricing model. Expected
volatilities are based on implied volatilities from traded options on our common
stock, historical volatilities and other factors. We use historical
data to estimate option exercise behavior, adjusted to reflect anticipated
increases in expected life.
The
weighted-average assumptions used in our Black-Scholes option-pricing model for
awards issued during the respective periods are as follows:
|
|
Three
Months Ended
|
|
|
|
March
29,
2008
|
|
|
March
31,
2007
|
|
Dividend
yield
|
|
|
2 |
% |
|
|
2 |
% |
Expected
volatility
|
|
|
30 |
% |
|
|
30 |
% |
Risk-free
interest rate
|
|
|
3 |
% |
|
|
5 |
% |
Expected
lives (In
years)
|
|
|
5. |
0
|
|
|
5. |
5
|
Stock
option activity under the 2007 Long-Term Incentive Plan for the first quarter of
2008 is as follows:
|
|
Number
of
Options
(In
thousands)
|
|
|
Weighted-
Average
Exercise
Price
|
|
|
Weighted-
Average
Remaining
Contractual
Life
(In
years)
|
|
|
Aggregate
Intrinsic
Value
(In
millions)
|
|
Outstanding
at beginning of period
|
|
|
9,024 |
|
|
$ |
35.37 |
|
|
|
6.3 |
|
|
$ |
316 |
|
Granted
|
|
|
1,458 |
|
|
|
54.17 |
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(178 |
) |
|
|
32.46 |
|
|
|
|
|
|
|
|
|
Canceled,
expired or forfeited
|
|
|
(39 |
) |
|
|
38.74 |
|
|
|
|
|
|
|
|
|
Outstanding
at end of period
|
|
|
10,265 |
|
|
$ |
38.08 |
|
|
|
6.6 |
|
|
$ |
168 |
|
Exercisable
at end of period
|
|
|
7,014 |
|
|
$ |
32.90 |
|
|
|
5.4 |
|
|
$ |
151 |
|
Restricted
Stock Units
The fair
value of a restricted stock unit paid in stock that was granted in 2007 is based
on the trading price of our common stock on the date of grant, less required
adjustments to reflect the fair value of the award as dividends are not paid on
these units until the restricted stock unit vests. Beginning with the 2008
grant, cash dividends will be paid on a quarterly basis prior to vesting. The
fair value of a restricted stock unit paid in stock granted in 2008 is based on
the trading price of our common stock on the date of grant. The weighted-average
grant date fair value of restricted stock units paid in stock that were granted
in the first quarter of 2008 and 2007 was approximately $54 and $43 per share,
respectively.
Activity
for restricted stock units paid in stock during the three months ended March 29,
2008 is as follows:
(Shares
in thousands)
|
|
Number
of
Shares
|
|
|
Weighted-Average
Grant Date Fair Value
|
|
Outstanding
at beginning of period, nonvested
|
|
|
2,506 |
|
|
$ |
37.40 |
|
Granted
|
|
|
593 |
|
|
|
54.38 |
|
Vested
|
|
|
(321 |
) |
|
|
32.04 |
|
Forfeited
|
|
|
(97 |
) |
|
|
37.24 |
|
Outstanding
at end of period, nonvested
|
|
|
2,681 |
|
|
$ |
41.80 |
|
Share-Based
Compensation Awards
The value
of the share-based compensation awards that vested and/or were paid during the
respective periods is as follows:
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29,
2008
|
|
|
March
31,
2007
|
|
Subject
only to service conditions:
|
|
|
|
|
|
|
Value of shares, options or units
vested
|
|
$ |
31 |
|
|
$ |
25 |
|
Intrinsic value of cash awards
paid
|
|
|
4 |
|
|
|
4 |
|
Subject
to performance vesting conditions:
|
|
|
|
|
|
|
|
|
Intrinsic value of cash awards
paid
|
|
|
41 |
|
|
|
42 |
|
Intrinsic
value of amounts paid under Deferred Income Plan
|
|
|
3 |
|
|
|
2 |
|
Note
6: Retirement Plans
We
provide defined benefit pension plans and other postretirement benefits to
eligible employees. The components of net periodic benefit cost for
these plans for the three months ended March 29, 2008 and March 31, 2007 are as
follows:
|
|
Pension
Benefits
|
|
|
Postretirement
Benefits
Other
Than Pensions
|
|
(In
millions)
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Service
cost
|
|
$ |
37 |
|
|
$ |
33 |
|
|
$ |
2 |
|
|
$ |
2 |
|
Interest
cost
|
|
|
82 |
|
|
|
73 |
|
|
|
11 |
|
|
|
10 |
|
Expected
return on plan assets
|
|
|
(109 |
) |
|
|
(99 |
) |
|
|
- |
|
|
|
- |
|
Amortization
of prior service cost (credit)
|
|
|
5 |
|
|
|
4 |
|
|
|
(1 |
) |
|
|
(1 |
) |
Amortization
of net loss
|
|
|
6 |
|
|
|
13 |
|
|
|
4 |
|
|
|
6 |
|
Net
periodic benefit cost
|
|
$ |
21 |
|
|
$ |
24 |
|
|
$ |
16 |
|
|
$ |
17 |
|
Note
7: Commitments and Contingencies
We are
subject to legal proceedings and other claims arising out of the conduct of our
business, including proceedings and claims relating to private sector
transactions; government contracts; compliance with applicable laws and
regulations; production partners; product liability; employment; and
environmental, safety and health matters. Some of these legal proceedings and
claims seek damages, fines or penalties in substantial amounts or remediation of
environmental contamination. As a government contractor, we are subject to
audits, reviews and investigations to determine whether our operations are being
conducted in accordance with applicable regulatory
requirements. Under federal government procurement regulations,
certain claims brought by the U.S. Government could result in our being
suspended or debarred from U.S. Government contracting for a period of time. On
the basis of information presently available, we do not believe that existing
proceedings and claims will have a material effect on our financial position or
results of operations.
The
Internal Revenue Service (IRS) has challenged both the ability to accelerate the
timing of tax deductions and the amounts of those deductions related to certain
leveraged lease transactions within the Finance segment. These
transactions, along with other transactions with similar characteristics, have
an initial investment of approximately $209 million. Resolution of
these issues may result in an adjustment to the timing of taxable income and
deductions that reduce the effective yield of the leveraged lease transactions.
In addition, resolution of these issues could result in the acceleration of cash
payments to the IRS. Deferred tax liabilities of $180 million are
recorded on our consolidated balance sheet related to these leases at March 29,
2008. We believe that the proposed IRS adjustments are inconsistent with the tax
law in existence at the time the leases were originated and intend to vigorously
defend our position.
Armed Reconnaissance Helicopter
(ARH) Program — The ARH program includes a development phase, covered by
the System Development and Demonstration (SDD) contract, and a production
phase. The SDD contract is a cost plus incentive fee contract under
which our eligibility for fees is reduced as total contract costs
increase. Since 2006, the costs of the SDD contract have
exceeded the threshold at which we are eligible to earn profit. In
December 2007, we agreed to expand the scope of the development contract
efforts on a funded basis.
During
2007, we continued to restructure the production portion of this program through
negotiations with the U.S. Government, which included reducing the number of
units and modifying the pricing and delivery schedules. Based on the status of
the negotiations during the year and contractual commitments with our vendors
related to materials for the anticipated production units we procured at our
risk, we established reserves in 2007 representing our best estimate of the
expected loss for this program. At December 29, 2007, reserves for
this program totaled $50 million.
In April
2008, we received a request for proposal from the U.S. Government for the
restructured low-rate initial production (LRIP) program, and we expect that the
contract for the initial lot will be finalized later this year. The $50 million
reserve recorded in 2007 remains our best estimate of the expected loss at this
time.
Note
8: Guarantees and Indemnifications
As
disclosed under the caption “Guarantees and Indemnifications” in Note 17 to the
Consolidated Financial Statements in Textron’s 2007 Annual Report on Form 10-K,
we have issued or are party to certain guarantees. As of March 29,
2008, there has been no material change to these guarantees.
We
provide limited warranty and product maintenance programs, including parts and
labor, for certain products for periods ranging from one to five
years. We estimate the costs that may be incurred under warranty
programs and record a liability in the amount of such costs at the time product
revenue is recognized. Factors that affect this liability include the
number of products sold, historical and anticipated rates of warranty claims,
and cost per claim. We assess the adequacy of our recorded warranty
and product maintenance liabilities periodically and adjust the amounts as
necessary.
Changes
in our warranty and product maintenance liabilities are as follows:
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29,
2008
|
|
|
March
31,
2007
|
|
Accrual
at the beginning of period
|
|
$ |
321 |
|
|
$ |
315 |
|
Provision
|
|
|
46 |
|
|
|
45 |
|
Settlements
|
|
|
(50 |
) |
|
|
(46 |
) |
Adjustments
to prior accrual estimates
|
|
|
(10 |
) |
|
|
6 |
|
Accrual
at the end of period
|
|
$ |
307 |
|
|
$ |
320 |
|
Note
9: Fair Values of Assets and Liabilities
In
September 2006, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements,”
effective for financial statements issued for fiscal years beginning after
November 15, 2007. SFAS No. 157 replaces multiple existing
definitions of fair value with a single definition, establishes a consistent
framework for measuring fair value and expands financial statement disclosures
regarding fair value measurements. This Statement applies only to fair value
measurements that already are required or permitted by other accounting
standards and does not require any new fair value measurements. In
February 2008, the FASB issued FASB Staff Position (FSP) No. 157-2, which
delayed until the first quarter of 2009 the effective date of SFAS No. 157 for
nonfinancial assets and liabilities that are not recognized or disclosed at fair
value in the financial statements on a recurring basis.
The
adoption of SFAS No. 157 for our financial assets and liabilities in the first
quarter of 2008 did not have a material impact on our financial position or
results of operations. Our nonfinancial assets and liabilities that meet the
deferral criteria set forth in FSP No. 157-2 include goodwill, intangible
assets, property, plant and equipment and other long-term investments, which
primarily represent collateral that is received by the Finance group in
satisfaction of troubled loans. We do not expect that the adoption of
SFAS No. 157 for these nonfinancial assets and liabilities will have a material
impact on our financial position or results of operations.
In
accordance with the provisions of SFAS No. 157, we measure fair value at the
price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement
date. The Statement prioritizes the assumptions that market
participants would use in pricing the asset or liability (the “inputs”) into a
three-tier fair value hierarchy. This fair value hierarchy gives the
highest priority (Level 1) to quoted prices in active markets for identical
assets or liabilities and the lowest priority (Level 3) to unobservable inputs
in which little or no market data exists, requiring companies to develop their
own assumptions. Observable inputs that do not meet the criteria of
Level 1, and include quoted prices for similar assets or liabilities in active
markets or quoted prices for identical assets and liabilities in markets that
are not active, are categorized as Level 2. Level 3 inputs are those
that reflect our estimates about the assumptions market participants would use
in pricing the asset or liability, based on the best information available in
the circumstances. Valuation techniques for assets and liabilities
measured using Level 3 inputs may include methodologies such as the market
approach, the income approach or the cost approach, and may use unobservable
inputs such as projections, estimates and management’s interpretation of current
market data. These unobservable inputs are only utilized to the
extent that observable inputs are not available or cost-effective to
obtain.
Assets
and Liabilities Recorded at Fair Value on a Recurring Basis
The table
below presents the assets and liabilities measured at fair value on a recurring
basis at March 29, 2008 categorized by the level of inputs used in the valuation
of each asset and liability.
(In
millions)
|
|
Total
|
|
|
Quoted
Prices in Active Markets for Identical Assets or Liabilities
(Level
1)
|
|
|
Significant
Other Observable Inputs
(Level
2)
|
|
|
Significant
Unobservable
Inputs
(Level
3)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
group
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange rate
forwardcontracts, net
|
|
$ |
18 |
|
|
$ |
- |
|
|
$ |
18 |
|
|
$ |
- |
|
Total Manufacturing
group
|
|
|
18 |
|
|
|
- |
|
|
|
18 |
|
|
|
- |
|
Finance group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-only
strips
|
|
|
52 |
|
|
|
- |
|
|
|
- |
|
|
|
52 |
|
Other marketable
securities
|
|
|
18 |
|
|
|
- |
|
|
|
18 |
|
|
|
- |
|
Derivative financial
instruments, net
|
|
|
64 |
|
|
|
- |
|
|
|
64 |
|
|
|
- |
|
Total Finance
group
|
|
|
134 |
|
|
|
- |
|
|
|
82 |
|
|
|
52 |
|
Total assets
|
|
$ |
152 |
|
|
$ |
- |
|
|
$ |
100 |
|
|
$ |
52 |
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash settlement forward
contract
|
|
$ |
20 |
|
|
$ |
20 |
|
|
$ |
- |
|
|
$ |
- |
|
Total Manufacturing
group
|
|
|
20 |
|
|
|
20 |
|
|
|
- |
|
|
|
- |
|
Total
liabilities
|
|
$ |
20 |
|
|
$ |
20 |
|
|
$ |
- |
|
|
$ |
- |
|
Valuation
Techniques
Manufacturing
Group
Foreign
exchange rate forward contracts are measured at fair value using the market
method valuation technique. The inputs to this technique utilize
current foreign exchange forward market rates published by third-party leading
financial news and data providers. This is observable data that
represents the rates that the financial institution uses for contracts entered
into at that date; however, they are not based on actual transactions so they
are classified as Level 2. We record changes in the fair value of these
contracts, to the extent they are effective as hedges, in other comprehensive
income. If a contract does not qualify for hedge accounting or is designated as
a fair value hedge, changes in the fair value of the contract are recorded in
income.
Cash
settlement forward contracts on our common stock are used to manage the expense
related to stock-based compensation awards. The use of these forward
contracts modifies compensation expense exposure to changes in the stock price
with the intent of reducing potential variability. These contracts
are measured at fair value using the market method valuation
technique. Since the input to this technique is based on the quoted
price of our common stock at the measurement date, it is classified as Level
1. Gains or losses on these instruments are recorded as an adjustment
to compensation expense.
Finance
Group
Interest-only
strips are generally retained upon the sale of finance receivables to qualified
special purpose trusts. These interest-only strips are initially recorded at the
allocated carrying value, which is determined based on the relative fair values
of the finance receivables sold and the interests retained. We
estimate fair value upon the initial recognition of the retained interest based
on the present value of expected future cash flows using our best estimates of
key assumptions – credit losses, prepayment speeds, forward interest rate yield
curves and discount rates commensurate with the risks involved. These
inputs are classified as Level 3 since they reflect our own assumptions about
the assumptions market participants would use in pricing these assets based on
the best information available in the circumstances. We review the
fair values of the interest-only strips quarterly using a discounted cash flow
model and updated assumptions, and compare such amounts with the carrying value.
When a change in fair value is deemed temporary, we record a corresponding
credit or charge to other comprehensive income for any unrealized gains or
losses. If a decline in the fair value is determined to be other than
temporary, we record a corresponding charge to income.
Other
marketable securities represent investments in notes receivable issued by
securitization trusts that purchase timeshare notes receivable from resort
developers. These notes are classified as available-for-sale
securities and are held at fair value, which is based on observable inputs for
similar securitization interests in markets that are currently
inactive. Changes in fair value for these notes are recorded in other
comprehensive income. If a decline in the fair value is determined to be other
than temporary, we record a corresponding charge to income.
Derivative
financial instruments are measured at fair value based on observable market
inputs for various interest rates and foreign currency rates published by
third-party leading financial news and data providers. This is
observable data that represents the rates used by market participants for
instruments entered into at that date; however, they are not based on actual
transactions so they are classified as Level 2. Changes in fair value for these
instruments are primarily recorded in interest expense.
Changes
in Fair Value for Unobservable Inputs
The table
below presents the change in fair value measurements that used significant
unobservable inputs (Level 3) during the period ended March 29,
2008:
|
|
|
|
(In
millions)
|
|
Interest-only
Strips
|
|
Balance,
beginning of period
|
|
$ |
43 |
|
Net
gains for the period:
|
|
|
|
|
Increase due to securitization
gains on sale of finance receivables
|
|
|
21 |
|
Change in value recognized in
Finance revenues
|
|
|
1 |
|
Change in value recognized in
other comprehensive income
|
|
|
2 |
|
Collections
|
|
|
(15 |
) |
Balance,
end of period
|
|
$ |
52 |
|
We also
adopted the provisions of SFAS No. 159 “The Fair Value Option for Financial
Assets and Financial Liabilities – Including an Amendment of FASB Statement No.
115” in the first quarter of 2008. This Statement allows us to choose to measure
eligible assets and liabilities at fair value with changes in value recognized
in earnings. Fair value treatment may be elected either upon initial recognition
of an eligible asset or liability or, for an existing asset or liability, if an
event triggers a new basis of accounting. We did not elect to re-measure any of
our existing financial assets or liabilities under the provisions of this
Statement.
Note
10: Segment Information
Prior to
fiscal 2008, Textron reported segment financial results within four segments:
Bell, Cessna, Industrial and Finance. The Bell segment consisted of
Bell Helicopter and the Textron Systems division. With recent acquisitions and
organic growth, the Textron Systems division now provides a significant portion
of our consolidated revenues. As Textron Systems and Bell Helicopter
both continue to grow, these businesses require autonomy from each other and
dedicated management focus. Effective at the beginning of fiscal
2008, we changed our segment reporting by separating the former Bell segment
into two segments: the Bell segment and the Defense & Intelligence
segment. The Cessna, Industrial and Finance segments have not been
changed. We now operate in, and will report financial information for, the
following five business segments: Cessna, Bell, Defense & Intelligence,
Industrial and Finance. These segments reflect the manner in which we now manage
our operations. Prior periods have been restated to reflect the new segment
reporting structure.
Segment
profit is an important measure used for evaluating performance and for
decision-making purposes. Segment profit for the manufacturing
segments excludes interest expense and certain corporate
expenses. The measurement for the Finance segment includes interest
income and expense. Provisions for losses on finance receivables
involving the sale or lease of our products are recorded by the selling
manufacturing division when our Finance group has recourse to the Manufacturing
group.
Our
revenues by segment and a reconciliation of segment profit to income from
continuing operations before income taxes are as follows:
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29,
2008
|
|
|
March
31,
2007
|
|
REVENUES
|
|
|
|
|
|
|
MANUFACTURING:
|
|
|
|
|
|
|
Cessna
|
|
$ |
1,246 |
|
|
$ |
968 |
|
Bell
|
|
|
574 |
|
|
|
580 |
|
Defense &
Intelligence
|
|
|
575 |
|
|
|
359 |
|
Industrial
|
|
|
909 |
|
|
|
847 |
|
|
|
|
3,304 |
|
|
|
2,754 |
|
FINANCE
|
|
|
214 |
|
|
|
210 |
|
Total
revenues
|
|
$ |
3,518 |
|
|
$ |
2,964 |
|
SEGMENT
OPERATING PROFIT
|
|
|
|
|
|
|
|
|
MANUFACTURING:
|
|
|
|
|
|
|
|
|
Cessna
|
|
$ |
207 |
|
|
$ |
155 |
|
Bell
|
|
|
53 |
|
|
|
25 |
|
Defense &
Intelligence
|
|
|
71 |
|
|
|
66 |
|
Industrial
|
|
|
50 |
|
|
|
60 |
|
|
|
|
381 |
|
|
|
306 |
|
FINANCE
|
|
|
42 |
|
|
|
52 |
|
Segment
profit
|
|
|
423 |
|
|
|
358 |
|
Corporate
expenses and other, net
|
|
|
(40 |
) |
|
|
(50 |
) |
Interest
expense, net
|
|
|
(30 |
) |
|
|
(24 |
) |
Income
from continuing operations before income taxes
|
|
$ |
353 |
|
|
$ |
284 |
|
Consolidated
Results of Operations
Revenues
and Segment Profit
Revenues
increased $554 million, or 19%, to $3.5 billion in the first quarter of 2008
compared with the first quarter of 2007. This increase is primarily
due to revenues from newly acquired businesses of $263 million, higher
manufacturing volume of $180 million, higher pricing of $83 million and
favorable foreign exchange of $52 million in the Industrial segment. These
increases were partially offset by the impact of last year’s reimbursement of
costs related to Hurricane Katrina of $28 million.
Segment
profit increased $65 million, or 18%, to $423 million in the first quarter of
2008, compared with the first quarter of 2007. This increase is
primarily due to higher pricing of $83 million, the benefit from higher volume
and mix of $26 million, favorable cost performance of $20 million and the
benefit from newly acquired businesses of $13 million. These
increases were partially offset by inflation of $69 million and lower segment
profit in the Finance segment of $10 million.
Backlog
Backlog
in the aircraft and defense businesses grew by $3.3 billion to $22 billion at
the end of first quarter of 2008, compared to the end of
2007. Approximately $1.9 billion of this increase was at Cessna and
$1.4 billion at Bell. At Cessna, new business jet orders outpaced
deliveries by 2.5 to 1, with 66% of these new orders from international
customers, compared with approximately 47% in the first quarter of
2007. Bell’s backlog increased as a result of a multi-year
procurement contract entered into in March for the V-22 tiltrotor aircraft,
which added $1.2 billion to backlog for the first funded lot and certain
advanced procurement for additional lots. The remaining contract
value of $4.7 billion will be reflected in backlog as each subsequent production
lot is funded.
Corporate
Expenses and Other, net
Corporate
expenses and other, net decreased $10 million in the first quarter of 2008,
compared with 2007, primarily due to $12 million of lower compensation expenses
as a result of our stock price depreciation.
Income
Taxes
A
reconciliation of the federal statutory income tax rate to the effective income
tax rate is provided below:
|
|
Three
Months Ended
|
|
|
|
March
29,
2008
|
|
|
March
31,
2007
|
|
Federal
statutory income tax rate
|
|
|
35.0 |
% |
|
|
35.0 |
% |
Increase
(decrease) in taxes resulting from:
|
|
|
|
|
|
|
|
|
State income
taxes
|
|
|
1.8 |
|
|
|
0.7 |
|
Foreign tax rate
differential
|
|
|
(6.0 |
) |
|
|
(2.1 |
) |
Manufacturing
deduction
|
|
|
(1.3 |
) |
|
|
(1.4 |
) |
Equity hedge
income
|
|
|
3.3 |
|
|
|
0.5 |
|
Canadian functional
currency
|
|
|
- |
|
|
|
(0.5 |
) |
Other, net
|
|
|
0.3 |
|
|
|
(1.9 |
) |
Effective
income tax rate
|
|
|
33.1 |
% |
|
|
30.3 |
% |
Segment
Analysis
Prior to
fiscal 2008, we reported segment financial results within four segments: Bell,
Cessna, Industrial and Finance. The Bell segment consisted of Bell
Helicopter and the Textron Systems division. With recent acquisitions and
organic growth, the Textron Systems division now provides a significant portion
of our consolidated revenues. As Textron Systems and Bell Helicopter
both continue to grow, these businesses require autonomy from each other and
dedicated management focus. Effective at the beginning of fiscal
2008, we changed our segment reporting by separating the former Bell segment
into two segments: the Bell segment and the Defense & Intelligence
segment. The Cessna, Industrial and Finance segments have not been
changed. We now operate in, and report financial information for, the following
five business segments: Cessna, Bell, Defense & Intelligence, Industrial and
Finance. These segments reflect the manner in which we now manage our
operations. Prior periods have been recast to reflect the new segment reporting
structure.
Segment
profit is an important measure used to evaluate performance and for
decision-making purposes. Segment profit for the manufacturing
segments excludes interest expense and certain corporate
expenses. The measurement for the Finance segment includes interest
income and expense.
Cessna
|
|
|
|
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29, 2008
|
|
|
March
31, 2007
|
|
Revenues
|
|
$ |
1,246 |
|
|
$ |
968 |
|
Segment
profit
|
|
|
207 |
|
|
|
155 |
|
In the
first quarter of 2008, Cessna’s revenues and segment profit increased $278
million and $52 million, respectively, compared with 2007. Revenues
increased largely due to higher volume of $212 million, reflecting higher
Citation business jet deliveries, improved pricing of $58 million and an $8
million benefit from a newly acquired business. We delivered 95 jets in the
first quarter of 2008, compared with 67 jets in the first quarter of 2007.
Segment profit increased primarily due to improved pricing of $58 million, the
$44 million impact from higher volume and favorable warranty performance of $12
million, partially offset by inflation of $32 million and increased engineering
and product development expense of $18 million.
Bell
|
|
|
|
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29, 2008
|
|
|
March
31, 2007
|
|
Revenues
|
|
$ |
574 |
|
|
$ |
580 |
|
Segment
profit
|
|
|
53 |
|
|
|
25 |
|
U.S.
Government Business
Revenues
and segment profit for Bell’s U.S. Government business increased $50 million and
$27 million, respectively, in the first quarter of 2008, compared with
2007. The increase in revenues is mainly due to higher V-22 volume of
$49 million and higher spares and service revenue of $7 million, partially
offset by lower H-1 program revenue of $11 million. The increase in
segment profit for this business is primarily due to improved cost performance
of $19 million, largely due to the impact of a $25 million charge to the Armed
Reconnaissance Helicopter (ARH) program in the first quarter of 2007 related to
costs incurred and supplier obligations in excess of funding, and an $8 million
contribution from higher volume and mix. During the first quarter of
2008, we recorded a net charge of $5 million for the H-1 program, which was
consistent with a $5 million charge for the program in the first quarter of
2007. The 2008 charge is primarily related to the impact of a cabin
supply issue on remaining Lot 3 and 4 deliveries.
ARH Program — The ARH program
includes a development phase, covered by the System Development and
Demonstration (SDD) contract, and a production phase. The SDD
contract is a cost plus incentive fee contract under which our eligibility for
fees is reduced as total contract costs increase. Since 2006, the
costs of the SDD contract have exceeded the threshold at which we are eligible
to earn profit. In December 2007, we agreed to expand the scope of
the development contract efforts on a funded basis.
During
2007, we continued to restructure the production portion of this program through
negotiations with the U.S. Government, which included reducing the number of
units and modifying the pricing and delivery schedules. Based on the status of
the negotiations during the year and contractual commitments with our vendors
related to materials for the anticipated production units we procured at our
risk, we established reserves in 2007 representing our best estimate of the
expected loss for this program. At December 29, 2007, reserves for
this program totaled $50 million.
In April
2008, we received a request for proposal from the U.S. Government for the
restructured low-rate initial production (LRIP) program, and we expect that the
contract for the initial lot will be finalized later this year. The $50 million
reserve recorded in 2007 remains our best estimate of the expected loss at this
time. Until the contract negotiations are finalized, including
pricing, aircraft specifications and delivery schedules, losses related to
future contract awards or recovery of our vendor obligations are
uncertain.
Commercial
Business
Revenues
for Bell’s commercial business decreased $56 million, while segment profit
increased $1 million in the first quarter of 2008, compared with
2007. The decrease in revenues for this business is primarily due to
lower helicopter volume of $76 million, partially offset by higher pricing of
$13 million and $6 million in revenues from newly acquired
businesses. Segment profit reflects favorable cost performance of $15
million and higher pricing of $13 million, which were essentially offset by the
unfavorable impact from lower volume of $17 million and inflation of $10
million.
Defense
& Intelligence
|
|
|
|
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29, 2008
|
|
|
March
31, 2007
|
|
Revenues
|
|
$ |
575 |
|
|
$ |
359 |
|
Segment
profit
|
|
|
71 |
|
|
|
66 |
|
Revenues
and segment profit increased $216 million and $5 million, respectively, in the
first quarter of 2008, compared with 2007. The increase in revenues
is primarily due to the acquisition of AAI, which contributed $245 million,
partially offset by the impact of a $28 million reimbursement of costs in the
first quarter of 2007 related to Hurricane Katrina. Increased volume
from higher intelligent battlefield systems revenue of $15 million and higher
Lycoming sales of $8 million, was offset by lower Sensor Fused Weapon deliveries
of $14 million and lower Joint Direct Attack Munitions volume of $11
million.
Segment
profit increased primarily due to the benefit from the newly acquired AAI
business of $18 million, partially offset by unfavorable cost performance of $6
million and a $6 million combined impact from inflation and pricing. Cost
performance reflects the impact from a 2007 cost reimbursement related to
Hurricane Katrina of $28 million, partially offset by net favorable program
performance of $22 million, mainly related to $17 million for the Armored
Security Vehicle (ASV). ASV performance reflects $5 million related
to the favorable resolution of several customer and vendor claims during the
quarter.
Industrial
|
|
|
|
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29, 2008
|
|
|
March
31, 2007
|
|
Revenues
|
|
$ |
909 |
|
|
$ |
847 |
|
Segment
profit
|
|
|
50 |
|
|
|
60 |
|
Revenues
in the Industrial segment increased $62 million while segment profit decreased
$10 million in the first quarter of 2008, compared with
2007. Revenues increased primarily due to a favorable foreign
exchange impact of $52 million and higher pricing of $13
million. Volume decreased $7 million as lower revenue in the golf and
turf businesses of $20 million was partially offset by a $15 million combined
increase at Fluid & Power and Kautex. The decrease in
segment
profit
was mainly due to inflation of $21 million, largely reflecting higher material
costs of $16 million, partially offset by higher pricing of $13
million.
Finance
|
|
|
|
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29, 2008
|
|
|
March
31, 2007
|
|
Revenues
|
|
$ |
214 |
|
|
$ |
210 |
|
Segment
profit
|
|
|
42 |
|
|
|
52 |
|
Revenues
in the Finance segment increased $4 million in the first quarter of 2008,
compared with 2007, primarily due to a $14 million increase in securitization
gains and other fee income, last year’s $11 million reduction in revenues upon
the recognition of a residual value impairment and $5 million in
higher revenues resulting from $267 million in higher average finance
receivables. These increases were largely offset by a $28 million decrease in
revenues as a result of the decline in market interest rates. The
increase in securitization gains was primarily attributable to the sale of an
additional $180 million of receivables into the Aviation Finance securitization
and the increase in other fee income was primarily the result of a gain on the
sale of our remaining interest in a leveraged lease investment and increased
syndication fees.
Profit in
the Finance segment decreased $10 million in the first quarter of 2008, compared
with 2007, primarily due to a $22 million increase in the provision for loan
losses and a $10 million impact on net margin due to an increase in borrowing
costs relative to various market rate indices, partially offset by the increase
in securitization gains and other income of $14 million and the impact of last
year’s $11 million reduction in revenues upon the recognition of a residual
value impairment. The increase in the provision for loan losses was
primarily driven by a $15 million reserve established for one account in the
asset-based lending portfolio and weakening portfolio quality in the
distribution finance portfolio as general U.S. economic conditions have impacted
borrowers in certain industries.
Borrowing
costs increased relative to various market rate indices as credit market
volatility continued during the quarter. The increase was primarily
driven by two factors. The majority of our variable-rate term debt
resets quarterly based on LIBOR and a substantial portion of our variable-rate
assets reset monthly based on the Prime rate. Based on this mismatch,
the Prime rate reductions in the quarter were reflected in our finance
receivable portfolio yield in advance of being reflected in our borrowing
costs. In addition, we experienced increased borrowing spreads on
issuances of commercial paper and term debt in comparison with
2007.
The
following table presents information about the Finance segment’s credit
performance:
|
|
|
|
|
|
|
|
|
March
29,
|
|
|
December
29,
|
|
(Dollars
in millions)
|
|
2008
|
|
|
2007
|
|
Nonperforming
assets
|
|
$ |
179 |
|
|
$ |
123 |
|
Nonaccrual
finance receivables
|
|
$ |
139 |
|
|
$ |
79 |
|
Allowance
for losses
|
|
$ |
105 |
|
|
$ |
89 |
|
Ratio
of nonperforming assets to total finance assets
|
|
|
1.84 |
% |
|
|
1.34 |
% |
Ratio
of allowance for losses on receivables to nonaccrual finance
receivables
|
|
|
75.9 |
% |
|
|
111.7 |
% |
60+
days contractual delinquency as a percentage of finance
receivables
|
|
|
0.33 |
% |
|
|
0.43 |
% |
Net
charge-offs increased $7 million to $11 million in the first quarter of 2008,
compared with the first quarter of 2007. This increase is primarily
related to the distribution finance portfolio largely as a result of the
weakening U.S. general economic conditions. Nonperforming assets increased
$56 million primarily due to a $58 million increase in the asset-based lending
and distribution finance portfolios, largely attributable to two
accounts. Strong non-performing assets levels have continued in our
resort, aviation and golf portfolios and 60+ day delinquency percentage
performance has remained strong with improved collections in our golf and
aviation finance term lending portfolios. For the remainder of 2008,
we expect nonperforming assets and charge-offs to remain high relative to the
strong portfolio quality performance of 2007.
Liquidity
and Capital Resources
Our
financings are conducted through two separate borrowing groups. The
Manufacturing group consists of Textron Inc., consolidated with the entities
that operate in the Cessna, Bell, Defense & Intelligence and Industrial
segments, while the Finance group consists of the Finance segment, comprised of
Textron Financial Corporation and its subsidiaries. We designed this framework
to enhance our borrowing power by separating the Finance group. Our
Manufacturing group operations include the development, production and delivery
of tangible goods and services, while our Finance group provides financial
services. Due to the fundamental differences between each borrowing group’s
activities, investors, rating agencies and analysts use different measures to
evaluate each group’s performance. To support those evaluations, we present
balance sheet and cash flow information for each borrowing group within the
Consolidated Financial Statements.
We assess
liquidity for our Manufacturing group in terms of our ability to provide
adequate cash to fund our operating, investing and financing activities. Our
principal source of liquidity is operating cash flows. We also have liquidity
available to us via the commercial paper market and committed bank lines of
credit, as well as access to the public capital markets that provide us with
long-term capital at satisfactory terms.
Our
Finance group mitigates liquidity risk (i.e., the risk that we will be unable to
fund maturing liabilities or the origination of new finance receivables) by
developing and preserving reliable sources of capital. We use a variety of
financial resources to meet these capital needs. Cash for the Finance group is
provided from finance receivable collections, sales and securitizations, as well
as the issuance of commercial paper and term debt in the public and private
markets. This diversity of capital resources enhances its funding flexibility,
limits dependence on any one source of funds, and results in cost-effective
funding. The Finance group also can borrow from the Manufacturing group when the
availability of such borrowings creates an economic advantage to Textron in
comparison with borrowings from other sources. In making particular funding
decisions, management considers market conditions, prevailing interest rates and
credit spreads, and the maturity profile of its assets and
liabilities.
Manufacturing
Group Cash Flows of Continuing Operations
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29, 2008
|
|
|
March
31,
2007
|
|
Operating
activities
|
|
$ |
158 |
|
|
$ |
86 |
|
Investing
activities
|
|
|
(182 |
) |
|
|
(58 |
) |
Financing
activities
|
|
|
(120 |
) |
|
|
(237 |
) |
Operating
cash flows increased primarily due to earnings growth. Changes in our
working capital components resulted in a $307 million use of cash in the first
quarter of 2008, compared to a $294 million use of cash in the first quarter of
2007. Cash used for inventories continues to be a significant use of operating
cash due to increased production and inventory build-up primarily to support
increasing sales at Bell and Cessna.
Cash used
for investing activities increased primarily due to $100 million in cash
payments made in 2008 largely related to the acquisition of AAI at the end of
2007.
We used
less cash for financing activities in the first quarter of 2008, compared with
the first quarter of 2007, primarily due to a $75 million reduction in cash used
to repurchase our stock and due to a $70 million net increase in
borrowings.
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29,
2008
|
|
|
March
31, 2007
|
|
Operating
activities
|
|
$ |
52 |
|
|
$ |
69 |
|
Investing
activities
|
|
|
(477 |
) |
|
|
(28 |
) |
Financing
activities
|
|
|
412 |
|
|
|
(40 |
) |
The
decrease in cash flows provided by operating activities was primarily due to the
timing of payments of accrued interest and other liabilities and a reduction in
earnings largely driven by higher relative borrowing costs.
Cash
flows used by investing activities increased $449 million during the first
quarter of 2008, compared with the first quarter of 2007. While
finance receivable originations of $3 billion in the first quarter of 2008 were
comparable to $3.1 billion in the corresponding period in 2007, approximately
$530 million less cash was received from repayments, sales and securitizations
of finance receivables in the first quarter of 2008. The decrease in
cash repayments is largely due to $388 million in cash collected in the
distribution finance revolving securitization trust that has not yet been paid
to us and is included as a receivable in other assets for the Finance group. In
accordance with the trust agreements, this cash has been accumulated in the
trust to repay debt that is maturing in May 2008. An equivalent
amount of cash is expected to be paid to us in the second quarter of 2008 upon
the issuance of additional debt by the trust.
The
increase in financing cash flows during the first quarter of 2008 primarily
reflects $1.3 billion of higher commercial paper issuances from the first
quarter of 2007, partially offset by $450 million in lower proceeds from the
issuance of long-term debt. This net increase in borrowings was
primarily utilized to fund finance receivable originations, partially due to a
decrease in cash repayments discussed above in investing
activities.
Consolidated
Cash Flows of Continuing Operations
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29,
2008
|
|
|
March
31, 2007
|
|
Operating
activities
|
|
$ |
125 |
|
|
$ |
(65 |
) |
Investing
activities
|
|
|
(716 |
) |
|
|
(1 |
) |
Financing
activities
|
|
|
434 |
|
|
|
(142 |
) |
Operating
cash flows increased primarily due to earnings growth in the Manufacturing group
and a $74 million increase in cash received from its captive finance
receivables, net of originations.
Cash used
for investing activities increased as we continued to originate a similar level
of finance receivables this quarter compared to the corresponding quarter of
2007, while we received approximately $625 million less cash from repayments,
sales and securitizations of finance receivables, on a consolidated
basis. In addition, cash used for other investing activities
increased as we made $100 million in payments in 2008 largely related to the
acquisition of AAI at the end of 2007.
We
received more cash from financing activities during the first quarter of 2008,
compared with the first quarter of 2007, largely related to the Finance
group. This increase reflects $1.3 billion of higher commercial paper
issuances, partially offset by $450 million in lower proceeds from the issuance
of long-term debt in the Finance group. These commercial paper
issuances were utilized to repay maturing long-term debt and to fund finance
receivable originations. In addition, the Manufacturing group
used less cash primarily due a $75 million reduction in cash used to repurchase
our stock and due to a $70 million net increase in its
borrowings.
Captive
Financing
Through
our Finance group, we provide diversified commercial financing to third parties.
In addition, this group finances retail purchases and leases for new and used
aircraft and equipment manufactured by our Manufacturing group, otherwise known
as captive financing. In the Consolidated Statements of Cash Flows, cash
received from customers or from securitizations is reflected as operating
activities when received from third parties. However, in the cash flow
information provided for the separate borrowing groups, cash flows related to
captive financing activities are reflected based on the operations of each
group. For example, when product is sold by our Manufacturing group to a
customer and is financed by the Finance group, the origination of the finance
receivable is recorded within investing activities as a cash outflow in the
Finance group’s Statement of Cash Flows. Meanwhile, in the Manufacturing group’s
Statement of Cash Flows, the cash received from the Finance group on the
customer’s behalf is recorded within operating cash flows as a cash inflow.
Although cash is transferred between the two borrowing groups, there is no cash
transaction reported in the consolidated cash flows at the time of the original
financing. These captive financing activities, along with all significant
intercompany transactions, are reclassified or eliminated from the Consolidated
Statements of Cash Flows.
Reclassification
and elimination adjustments included in the Consolidated Statement of Cash Flows
are summarized below:
|
|
Three
Months Ended
|
|
(In
millions)
|
|
March
29,
2008
|
|
|
March
31,
2007
|
|
Reclassifications
from investing activities:
|
|
|
|
|
|
|
Finance receivable originations
for Manufacturing group inventory sales
|
|
$ |
(187 |
) |
|
$ |
(225 |
) |
Cash received from customers,
sale of receivables and securitizations
|
|
|
246 |
|
|
|
151 |
|
Other
|
|
|
(2 |
) |
|
|
(11 |
) |
Total
reclassifications from investing activities
|
|
|
57 |
|
|
|
(85 |
) |
Dividends
paid by Finance group to Manufacturing group
|
|
|
(142 |
) |
|
|
(135 |
) |
Total
reclassifications and adjustments to operating activities
|
|
$ |
(85 |
) |
|
$ |
(220 |
) |
Capital
Resources
The debt
(net of cash)-to-capital ratio for our Manufacturing group as of March 29, 2008
was 34%, compared with 32% at December 29, 2007, and the gross debt-to-capital
ratio at March 29, 2008 and December 29, 2007 was 38%.
Under
separate shelf registration statements filed with the Securities and Exchange
Commission, the Manufacturing group may issue public debt and other securities
in one or more offerings up to a total maximum offering of $2.0 billion, and the
Finance group may issue an unlimited amount of public debt securities. At March
29, 2008, we had $1.2 billion available under our registration statement. During
the first quarter of 2008, the Finance group issued $275 million of term debt
under its registration statement.
We have a
policy of maintaining unused committed bank lines of credit in an amount not
less than outstanding commercial paper balances. These facilities are in support
of commercial paper and letters of credit issuances only, and neither of these
lines of credit was drawn at March 29, 2008 or December 29, 2007.
Our
primary committed credit facilities at March 29, 2008 include the
following:
(In
millions)
|
|
Facility
Amount
|
|
|
Commercial
Paper
Outstanding
|
|
|
Letters
of
Credit
Outstanding
|
|
|
Amount
Not Reserved as Support for Commercial Paper and Letters of
Credit
|
|
Manufacturing
group — multi-year facility expiring in 2012*
|
|
$ |
1,250 |
|
|
$ |
77 |
|
|
$ |
23 |
|
|
$ |
1,150 |
|
Finance
group — multi-year facility expiring in 2012
|
|
|
1,750 |
|
|
|
2,053 |
|
|
|
10 |
|
|
|
(313 |
) |
Total
|
|
$ |
3,000 |
|
|
$ |
2,130 |
|
|
$ |
33 |
|
|
$ |
837 |
|
*
The Finance group is permitted to borrow under this multi-year
facility.
At March
29, 2008, our Finance group had $3.1 billion in debt and $479 million in other
liabilities that are payable within the next 12 months.
Foreign
Exchange Risks
Our
financial results are affected by changes in foreign currency exchange rates and
economic conditions in the foreign markets in which our products are
manufactured and/or sold. For the first quarter of 2008, the impact
of foreign exchange rate changes from the first quarter of 2007 increased
revenues by approximately $52 million (1.8%) and increased segment profit by
approximately $2 million (0.6%).
Forward-Looking
Information
Certain
statements in this Quarterly Report on Form 10-Q 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 2007 Annual Report on Form
10-K 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.
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; (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 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) Textron Financial
Corporation’s
ability to maintain portfolio credit quality; (t) Textron Financial
Corporation’s access to financing, including securitizations, at competitive
rates; (u) uncertainty in estimating contingent liabilities and establishing
reserves to address such contingencies; (v) risks and uncertainties related to
acquisitions and dispositions; (w) the efficacy of research and development
investments to develop new products; (x) the launching of significant new
products or programs which could result in unanticipated expenses; (y)
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 (z) difficulties or unanticipated expenses in
connection with the consummation or integration of acquisitions, potential
difficulties in employee retention following the acquisition and risks that the
acquisition does not perform as planned or disrupts our current plans and
operations or that anticipated synergies and opportunities will not be
realized.
There has
been no significant change in our exposure to market risk during the first
quarter of 2008. For discussion of our exposure to market risk, refer
to Item 7A. Quantitative and Qualitative Disclosures about Market Risk contained
in Textron’s 2007 Annual Report on Form 10-K.
We have
carried out an evaluation, under the supervision and with the participation of
our management, including our Chairman, President and Chief Executive Officer
(the CEO) and our Executive Vice President and Chief Financial Officer (the
CFO), of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the Act)) as of the end of the
fiscal quarter covered by this report. Based upon that evaluation,
our CEO and CFO concluded that our disclosure controls and procedures are
effective in providing reasonable assurance that (a) the information required to
be disclosed by us in the reports that we file or submit under the Act is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission’s rules and forms, and (b) such
information is accumulated and communicated to our management, including our CEO
and CFO, as appropriate to allow timely decisions regarding required
disclosure.
There
were no changes in our internal control over financial reporting during the
fiscal quarter ended March 29, 2008 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
PART
II. OTHER INFORMATION
Issuer
Repurchases of Equity Securities
|
|
|
|
Total
Number
of
Shares
Purchased
|
|
|
Average
Price
Paid
per
Share
(Excluding
Commissions)
|
|
|
Total
Number of
Shares
Purchased as
Part
of Publicly
Announced
Plan
|
|
|
Maximum
Number
of Shares
that
May Yet Be
Purchased
Under
the Plan
|
|
Month
1 (December 30, 2007 - February
2, 2008)
|
|
|
1,596,000 |
|
|
$ |
58.22 |
|
|
|
1,596,000 |
|
|
|
21,153,000 |
|
Month
2 (February 3, 2008 - March
1, 2008)
|
|
|
50,000 |
|
|
|
54.75 |
|
|
|
50,000 |
|
|
|
21,103,000 |
|
Month
3 (March 2, 2008 - March
29, 2008)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
21,103,000 |
|
Total
|
|
|
1,646,000 |
|
|
$ |
58.11 |
|
|
|
1,646,000 |
|
|
|
|
|
On July
18, 2007, our Board of Directors approved a new share repurchase plan under
which we are authorized to repurchase up to 24 million share of common
stock. The new plan has no expiration date and supersedes the
previous plan, which was cancelled.
|
EXHIBITS |
|
|
|
|
|
10.1
|
Amended
and Restated Employment Agreement, entered in as of February 26, 2008, by
and between Textron and Kenneth C. Bohlen
|
|
|
|
|
10.2
|
Form
of Restricted Stock Unit Grant Agreement
|
|
|
|
|
12.1
|
Computation
of ratio of income to fixed charges of Textron Inc. Manufacturing
Group
|
|
|
|
|
12.2
|
Computation
of ratio of income to fixed charges of Textron Inc. including all
majority-owned subsidiaries
|
|
|
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
|
|
32.1
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
|
|
|
32.2
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
|
|
|
TEXTRON
INC.
|
Date:
|
April
25, 2008
|
|
s/Richard
L. Yates
|
|
|
|
Richard
L. Yates
Senior
Vice President and Corporate Controller
(principal
accounting officer)
|
LIST
OF EXHIBITS
The
following exhibits are filed as part of this report on Form 10-Q:
Name of
Exhibit
|
10.1
|
Amended
and Restated Employment Agreement, entered in as of February 26, 2008, by
and between Textron and Kenneth C. Bohlen
|
|
|
|
|
10.2
|
Form
of Restricted Stock Unit Grant Agreement
|
|
|
|
|
12.1
|
Computation
of ratio of income to fixed charges of Textron Inc. Manufacturing
Group
|
|
|
|
|
12.2
|
Computation
of ratio of income to fixed charges of Textron Inc. including all
majority-owned subsidiaries
|
|
|
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
|
|
32.1
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
|
|
|
32.2
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|