Textron Announces 18% EPS Increase

July 16, 1997

Record Performance Demonstrates Strength of Multi-Industry Business Mix

Providence, Rhode Island - July 16, 1997 - Textron today announced record second-quarter results, marking the company's 31st consecutive quarter of year-to-year income improvement. The strong pace of the global, multi-industry company continued this quarter with EPS from continuing operations up 18 percent to $0.85. Income from continuing operations rose 16 percent to $145 million, and revenues increased 12 percent to $2.7 billion from the year-ago quarter.

Today's mid-year results continue Textron's 31-quarter track record of income growth -- currently achieved by fewer than 25 other companies in the S&P 500. For the first six months of 1997, earnings per share and income from continuing operations were up 17 percent to $1.58, and 15 percent to $270 million, respectively. Revenues for the six-month period increased 13 percent to $5.2 billion in 1997, up from $4.6 billion in 1996.

"Textron's second-quarter results underscore the proven performance of our balanced mix of strong, market-leading businesses," said James F. Hardymon, Textron Chairman and Chief Executive Officer. "Textron's multi-industry strength has again benefited shareholders."

In the second quarter, Textron announced an agreement to sell its Speidel division, a leading maker of watchbands and fashion jewelry, to Hermann Hirsch Armbänder Ges.m.b.H. In addition, earlier this month, Textron announced the acquisition of Burkland, Inc. of Goodrich, Michigan, a manufacturer of fineblanked automotive components.

"We continue to actively manage our business mix, strengthening our four core segments by making 'bolt on' acquisitions that augment existing operations. We also continue to divest those businesses that are not aligned with our core segments," said Hardymon.

Textron Inc. (TXT:NYSE) is a $9.3 billion, global, multi-industry company with market-leading operations in Aircraft, Automotive, Industrial and Finance.

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TEXTRON SEGMENT ANALYSIS

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Aircraft

The Aircraft segment's revenues and income for the second quarter increased 20% and 21%, respectively. Bell Helicopter's revenues and income increased for the quarter, due to higher commercial and U.S. Government aircraft sales. Backlog decreased to $2.1 billion from $2.2 billion at the end of 1996, principally due to deliveries under the Canadian Forces contract. Cessna's sales and income increased primarily due to higher sales of business jets, especially the Citation X and Bravo. Backlog increased to a record $2.8 billion from $1.6 billion at year-end 1996, reflecting strong orders for the Citation line, including the Excel and the Citation X.

Automotive

Revenues increased 19%, reflecting the first quarter 1997 acquisition of Kautex, and the 1996 acquisitions of Valeo Wiper Systems and the remaining 50% of a joint venture in Born, Netherlands. The higher sales from acquisitions were partially offset by the impact of a strike at a Chrysler engine plant and the timing of replacement business and new model launches. Income decreased 20%, reflecting the above factors and our decision to begin a restructuring effort to improve overall automotive margins.

Industrial

Revenues and income increased 9% and 19%, respectively. The increases were principally due to higher sales and improved performance at Textron Fastening Systems and in the golf and turf-care businesses. In addition, results benefited from the third quarter 1996 acquisition of Klauke and the first quarter 1997 acquisitions of Maag Pump Systems and Maag Italia S.p.A.

Systems and Components

Revenues decreased 13%, while income equaled last year's level. The decrease in revenues reflected the third quarter 1996 divestiture of Textron Aerostructures, partially offset by higher revenues on the sensor fuzed weapon contract and an increase in demand for aerospace components. Operating margins reached 10.5% during the quarter, up from 9.1% a year ago.

Finance

Revenue and income both increased 6%. Avco Financial Services' results benefited from an increase in the earnings of its independent insurance operation, a higher level of finance receivables outstanding, and a decrease in the average cost of borrowed funds, partially offset by an increase in the level of charge-offs. The results for Textron's commercial finance division -- Textron Financial Corporation -- increased primarily due to a higher level of finance receivables and higher fee income.

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RECENT COMPANY HIGHLIGHTS

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Corporate

  • Under Textron's previously announced two-for-one stock split, additional shares of Textron common stock in the form of a stock dividend were distributed to shareholders on May 30.

     

  • John D. Butler was named executive vice president and chief human resources officer, succeeding William F. Wayland, who retired July 1. Mr. Butler joined Textron from General Motors, and will serve as a member of Textron's Management Committee.

Aircraft

  • Bell Helicopter received 39 commitments for the Bell Boeing 609, the commercial tiltrotor aircraft which combines the vertical takeoff and landing of a helicopter with the speed and range of a fixed-wing aircraft. Twenty six customers -- from countries including Australia, Poland, Canada, United Arab Emirates and the United States -- placed their orders with Bell for this aircraft.

     

  • Cessna Aircraft delivered its first single-engine 182 Skylane, joining Cessna's 172 Skyhawk model which began delivery in the first quarter of this year.

     

  • Cessna Aircraft expanded its global support network through new facilities and increased capabilities:

    • Ninth U.S.-based Citation Service Center opened in San Antonio, Texas.

       

    • First company-owned Service Center outside the U.S. was acquired in Paris, France. This new Service Center joins a growing list of Authorized Citation Service Centers in this region of the world.

       

    • Cessna appointed Reims Aviation S.A. as the authorized distributor in France for Cessna's new 172 Skyhawk, 182 Skylane and 206/206T Stationairs.

     

  • In a presentation ceremony at the Paris Air Show, Cessna Aircraft received its ISO 9001 certification. Cessna now becomes one of only a few aircraft manufacturers to be registered under this internationally recognized quality standard.

     

  • Executive Jet Inc. ordered 50 Citation Excels, representing the largest number of units ordered at one time in business aviation history. In the last two years, Executive Jet has ordered for its NetJets fractional ownership program 50 Citation Ultras, 31 Citation Xs and 14 Citation VIIs.

     

  • NetJets Europe, an extension of Executive Jet's U.S. fractional ownership program, announced addition of the Citation VII to its fleet.

Automotive

  • Kautex received the 1996 Quality Award from Audi for its new fuel system in the carmaker's A4 model, marking the third quality award Kautex has received from Audi.

     

  • Kautex received the Supplier of the Year Award from General Motors, recognizing Kautex as the 'Best of the Best' worldwide in plastic fuel tank systems. Kautex is among a select group of suppliers from 26 countries recognized by General Motors for exceeding specific performance standards in quality, service and price. Kautex has been honored three times with this prestigious award.

Industrial

  • Textron announced that it has entered into a definitive agreement with Austria-based Hermann Hirsch Armbänder Ges.m.b.H. under which Hirsch will purchase Textron's Speidel division. This transaction is expected to close on December 31, 1997.

     

  • In July, Textron's Industrial Segment acquired Burkland, Inc., a Michigan-based manufacturer of precision fineblanking metal components and assemblies for the automotive, heavy truck, agricultural, construction and consumer products markets. Burkland's 1996 sales were approximately $15 million.

Finance

  • Avco Financial Services purchased U.K.-based Philips Financial Services (approximately $65 million in receivables), which finances electronic, communication and high-tech medical equipment. This marks Textron's third European commercial finance acquisition in 1997.

     

  • AFS opened consumer finance operations in Stockholm, Sweden and in Dublin, Ireland. AFS now has over 1,200 branches operating in ten countries.


Connect with Textron IR

Eric Salander, Vice President, Investor Relations
(401) 457-2288
Cameron Vollmuth, Manager,
Investor Relations (401) 457-2288

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