Textron Reports Record Year-End Results

January 27, 1998

Double Digit Increases in Revenues and Earnings For Fourth Quarter and Year

Providence, Rhode Island - January 27, 1998 - Textron Inc. today reported a 19% increase in fourth-quarter diluted earnings per share, marking the company's 33rd consecutive quarter of year-to-year income growth. For the year, EPS rose 17%, led by strong revenue growth of 14%.

"This outstanding record of double-digit growth has been built on the collective strength of all four business segments and the company's relentless pursuit of operational excellence," said Textron Chairman and Chief Executive Officer James F. Hardymon.

"Textron's strong financial track record, combined with our balanced mix of market-leading businesses and clear strategies for growth, have once again delivered excellent value to our shareholders," Hardymon continued. Total returns to shareholders in 1997 were 35% and since 1989, the total annual returns have averaged 26%.

For the fourth quarter, earnings per share from continuing operations increased 19% to $.89, compared with $.75 per share for the corresponding period in 1996. Income from continuing operations for the quarter was up 17% to $150 million, compared with $128 million in 1996. Revenues were $2.8 billion, rising 16% from $2.4 billion last year.

For the year, earnings per share from continuing operations increased to $3.29, up 17% from $2.81 in 1996. Income from continuing operations rose 16%, to $558 million, as compared with $482 million in 1996. Revenues increased 14% to $10.5 billion from $9.3 billion in 1996.

In the fourth quarter, Textron acquired Brazaco Mapri Industrias, South America's market leader in engineered fasteners, and Bridge Wholesale Acceptance Corporation, a commercial lender based in Australia and New Zealand. A total of twelve acquisitions were made in 1997, half of which were in Europe. The acquisitions will contribute to Textron's goal of generating more than 40% of revenues from its international businesses by the year 2000.

"Textron's strategic acquisitions, coupled with the company's intense focus on operational excellence and new product development, will continue to drive our global growth," said Lewis B. Campbell, Textron's President and Chief Operating Officer.

Company financial highlights for 1997 include:

  • Return on equity increased to 17.5% from 15.8 % in 1996.
  • Free cash flow increased to $234 million as compared to $201 million in 1996.
  • Textron maintained its strong balance sheet with a debt-to-capital ratio of 25% at year-end 1997, compared with 29% at the end of 1996.
  • Textron repurchased 5.1 million of its common shares.
  • In June, Textron issued a two-for-one stock split in the form of a dividend.

"As we begin Textron's 75th anniversary year, we are well positioned to continue to deliver double-digit earnings-per-share growth," said Hardymon.

Textron (TXT:NYSE) is a $10.5 billion, global, multi-industry company with market-leading operations in Aircraft, Automotive, Industrial and Finance.

TEXTRON SEGMENT ANALYSIS

Aircraft

For the quarter, revenues increased 17% and income rose 22%. For the year, revenues and income increased 16% and 20%, respectively, driven by higher results at Cessna Aircraft.

Cessna's results increased for the quarter and year due to higher sales of business jets, specifically the Citation X and Bravo. Deliveries of business jets increased 42% to 180 aircraft. Backlog increased to a record $2.8 billion from $1.6 billion at year-end 1996.

Bell Helicopter's revenues and income decreased slightly for the quarter due to lower commercial aircraft sales, primarily in the international arena. For the year, sales and income increased due to higher U.S. Government and commercial aircraft sales, partially offset by lower revenues on the V-22 program and lower foreign military sales. Backlog decreased to $1.9 billion from $2.2 billion at the end of 1996, reflecting the completion of the Canadian Forces contract.

Automotive

Revenues for the fourth quarter increased 36%, while income decreased 5%, reflecting higher launch costs for new models and restructuring. For the year, revenues and income increased 31% and 3%, respectively.

The revenue increase for both the quarter and the year reflected the first quarter 1997 acquisition of Kautex and the third quarter 1997 acquisition of the General Rubber Goods division of Pirelli Tyres, Ltd. The full year comparisons also benefited from the 1996 acquisitions of Valeo Wiper Systems and the remaining 50% of a joint venture in Born, Netherlands.

Income for both periods reflected the benefit of higher sales from the acquisitions, partially offset by the timing of replacement business and new model launches, and the impact of the restructuring effort which began in the second quarter 1997. In addition, the full year results reflected the unfavorable impact of a strike at a Chrysler engine plant in the second quarter 1997.

Industrial

For the quarter, revenues and income increased 10% and 21% respectively, and for the year, they increased 8% and 15% respectively.

Results for both periods reflected an increase in demand for aerospace components, higher revenues on the sensor fuzed weapon contract and the contribution from the acquisitions of Maag Pump Systems, Maag Italia S.p.A. and Burkland. These factors were partially offset by the third quarter 1996 divestiture of Textron Aerostructures and lower revenues in marine and land systems products.

For the year, results also benefited from higher sales in the fastening systems business, including the 1996 acquisition of Valois Industries S.A. (now Textron Industries S.A.).

Finance

Revenues for the quarter increased 7% while income rose 10%. For the year, revenues and income increased 6% and 7%, respectively.

Avco Financial Services' results for the quarter and the year benefited from the gains on the sale of certain underperforming branches, a higher level of finance receivables outstanding (including the benefit of the acquisition of $720 million of consumer and commercial finance receivables), improved independent insurance operations, and a decrease in the average cost of borrowed funds.

These benefits were offset by an increase in the provision for net credit losses, a decrease in the yields on finance receivables, and higher operating expenses related to international expansion and the start-up of centralized sales processing centers in the U.S. and Canada.

The results for Textron's commercial finance division - Textron Finance Corporation -- in both periods reflected the benefit of higher revenues and lower provisions for loan losses, partially offset by growth in businesses with higher expense ratios.

Connect with Textron IR

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

Email Alert

Enter your Email *
Mailing Lists *





 
Enter the code shown above.