Textron Reports Strongest Financial Results in Company History

January 23, 1997

Across-the-Board Increases in Core Segments Drove Record Fourth-Quarter and Year-End Results

Providence, RI - January 23, 1997 - Textron Inc. today reported record revenues, income and earnings per share for 1996, and posted its 29th consecutive quarter of year-to-year income growth.

"We've just closed the books on another record quarter and year," said Textron Chairman and Chief Executive Officer James F. Hardymon. "Our four core business segments continue to drive the company's track record of improved financial results."

For the fourth quarter, earnings per share from continuing operations increased 19 percent to $1.50, compared with $1.26 per share for the corresponding period in 1995. Income from continuing operations for the quarter was $128 million, compared with $110 million in 1995. Revenues were $2.4 billion, up 9 percent from $2.2 billion last year.

For the year, earnings per share from continuing operations increased to $5.60, up 17 percent from $4.79 in 1995. Income from continuing operations rose to $482 million, compared with $416 million in 1995. Revenues were up 10 percent to $9.3 billion from $8.5 billion in 1995.

"More than seven years of consistent improvement in earnings reaffirms the value of our balanced mix of strong, market-leading businesses," said Hardymon. "Our aggressive acquisition activity of the past 18 months also contributed to our growth for the quarter and year," he continued.

In 1996, Textron announced the acquisition of eight companies, four of which were in Europe. These acquisitions helped drive the company's continued expansion into global markets. "International expansion is a critical element of our growth strategy," said Hardymon. "In 1996, we achieved our goal of generating at least 35 percent of our revenues from non-U.S. sources. In the spirit of continuous improvement, we've now raised the bar to 40 percent by 2001."

In 1996, Textron also continued to improve its operating margins and return on equity while maintaining a strong balance sheet:

  • Operating margins increased to 11.8 percent from 11.7 percent for 1995;

     

  • Return on equity increased to 15.8 percent from 15.5 percent for 1995;

     

  • Textron maintained its strong balance sheet with a debt-to-capital ratio of 29 percent at year-end 1996, compared with 34 percent at the end of 1995; and

     

  • Textron repurchased 3.2 million of its common shares, contributing to the increase in 1996 earnings per share.

"The momentum we've generated -- through our strategic acquisitions, new products and continued operational improvements -- positions us to continue to deliver double-digit earnings-per-share growth in 1997," said Hardymon.

Textron Inc. (NYSE: TXT) 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

For the quarter, revenues increased 15% and income rose 18%. For the year, revenues and income increased 7% and 11%, respectively.

Bell Helicopter's revenues increased for the quarter due to higher commercial aircraft sales, primarily in the international arena. For the year, sales decreased as lower sales of military helicopters to the U.S. Government and lower revenues on the V-22 Engineering, Manufacturing and Development (EMD) contract were partially offset by increased commercial aircraft sales. Income for the quarter approximated year-ago levels and decreased slightly for 1996. Both periods were impacted by the costs associated with the introduction of new commercial aircraft models. Backlog increased to $2.2 billion from $2.0 billion at the end of 1995, reflecting increased orders for commercial helicopters and new U.S. Government contract awards, partially offset by deliveries under the Canadian Forces contract.

Cessna's results increased for the quarter due to higher sales of business jets, specifically the Citation X. Results for the year increased due to higher sales of business jets and utility turboprop aircraft. Backlog increased to $1.6 billion from $1.5 billion at year-end 1995.

Automotive

Revenues and income for the fourth quarter increased 8% and 5%, respectively. For the year, income increased 8% on a 6% increase in revenues.

The improved results reflected the increased production of models with Textron content, particularly light trucks at Chrysler. In addition, the higher revenues reflected the benefit of the acquisitions of Valeo Wiper Systems and the remaining 50% of a joint venture in Born, Netherlands.

Industrial

For the quarter, revenues and income increased 31% and 30% respectively, and for the year they increased 41% and 32%, respectively.

The increases for both periods were principally due to higher sales in the fastening systems business, reflecting the fourth quarter 1995 acquisitions of Elco Industries and Boesner, and the 1996 acquisitions of Textron Industries S.A. and Xact Products. In addition, the year's results benefited from higher sales and improved performance at E-Z-GO, and continued strong performance in the contractor tool business, including the contribution from the Klauke acquisition.

Systems and Components

For the quarter, revenues decreased 37%, while income decreased 31%. Revenues and income decreased 24% and 12% respectively, for the year.

The decrease for both periods was due to reduced shipments on certain U.S. Government and commercial aerospace contracts and the impact of the divestiture of the Aerostructures division as of September 6.

Finance

Revenues for the quarter increased 3% while income rose 4%. For the year, revenues and income increased 6% and 5%, respectively.

For the quarter, Avco Financial Services' higher results reflected a decrease in the average cost of borrowed funds and a gain on the sale of receivables, partially offset by an increase in the provision for loan losses. The year's results also benefited from higher yields on finance receivables, an increase in earned insurance premiums and an increase in capital gains, partially offset by a higher level of insurance losses.

The results for Textron's commercial finance division, Textron Financial Corporation, increased for both periods due to a higher level of finance receivables. Income for the quarter also benefited from a lower provision for loan losses, reflecting a decrease in real estate charge-offs. For the year, however, the provision for losses increased due to higher charge-offs in the division's equipment portfolio.

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RECENT COMPANY HIGHLIGHTS

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Corporate

  • The purchase of Paul Revere by Provident Companies Inc. is approved by Provident and Paul Revere shareholders. The sale is expected to be completed in the first quarter of 1997.

     

  • Teresa Beck, chief financial officer and a member of the Executive Council of American Stores Company, is elected to Textron's Board of Directors.

Aircraft

  • Bell Helicopter announces the Bell Boeing 609, a nine-passenger civilian tiltrotor aircraft with first production delivery scheduled for 2001.

     

  • The Bell/Boeing Tiltrotor Team is awarded contract by the U.S. Naval Air Systems Command for the engineering and manufacturing development phase of the Special Operations Forces variant of the Osprey: the CV-22. The contract is valued at $490 million.

     

  • Bell Helicopter is awarded initial $134 million contract to upgrade 100 UN-H Huey helicopters for the Marine Corps.

Automotive

  • Textron acquires Germany-based Kautex Werke Reinold Hagen AG, the world's largest producer of plastic automotive fuel tanks. Kautex's 1996 revenues were approximately $500 million, with more than 82% derived from outside North America. The acquisition closed on January 7, 1997.

Finance

  • Avco Financial Services acquires Insurex Canada Inc., a provider of insurance premium financing to commercial and consumer customers through a network of local, regional and international brokers and carriers.


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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