Textron Reports Fourth Quarter 2001 Earnings Per Share of $0.47 Before Special Charges, Restructuring-Related Expenses And Gain on Sale of Automotive Trim

January 24, 2002

Providence, Rhode Island - January 24, 2002 - Textron Inc. (NYSE: TXT) today reported fourth quarter diluted earnings per share of $0.47 before special charges, restructuring-related expenses and a gain on the sale of Automotive Trim, compared with last year's diluted earnings per share of $1.28 before special charges. Earnings for the quarter before special charges, restructuring-related expenses and the gain on the sale of Automotive Trim were $67 million versus earnings before special charges of $185 million in the fourth quarter of 2000.

For 2001, diluted earnings per share were $2.32 before special charges and restructuring-related expenses and the gain on the sale of Automotive Trim, compared to diluted earnings per share of $4.65 from continuing operations before special charges a year ago. Earnings in 2001 before special charges, restructuring-related expenses and the gain on the sale of Automotive Trim were $332 million, compared to year 2000 earnings from continuing operations before special charges of $680 million.

Results before non-recurring items are useful in analyzing operating performance, but should be used only in conjunction with results reported in accordance with generally accepted accounting principles. Reported earnings for the fourth quarter of 2001 were $257 million. This reflects $29 million of pretax special charges and restructuring-related expenses and a pretax gain of $339 million on the sale of Automotive Trim. For the year, reported earnings were $166 million. This reflects $471 million in pretax special charges and restructuring-related expenses and a pretax gain of $342 million on the sale of Automotive Trim and Turbine Engine Components.

Fourth quarter revenues were $3.2 billion, down from $3.3 billion in 2000, primarily due to softening sales across many of Textron's businesses, partially offset by strong sales in the Aircraft segment. For the year, free cash flow before restructuring was $384 million compared to $463 million in 2000. The company continued to make excellent progress on its restructuring program, ending the year with restructuring savings of about $154 million.

Textron Chairman, President and Chief Executive Officer Lewis B. Campbell said, "In the midst of what continues to be a challenging economic environment we were pleased to deliver earnings for the quarter consistent with our plan, while exceeding our goals for cash. Our cash results were due, in large part, to our plan to aggressively reduce working capital during the quarter."

Commenting on 2001, Campbell said, "We made excellent progress in strengthening Textron for a healthier future. We accelerated our restructuring program, which had originally called for $50 to $70 million in savings in 2001. We also made numerous changes to our organization and re-engineered many of our processes to leverage the full size of Textron and to drive operating excellence in each of our businesses during the year. The immediate impact of these initiatives has been masked by the impact of lower volumes, but their full value will become clearly evident when the economy rebounds. Finally, we made significant progress with our portfolio initiative with the sale of 10 non-core businesses since we announced our transformation strategy a year ago.

"In 2002, we will advance further on each of these strategic initiatives. We are confident that we are creating a more resilient business model with a significantly improved cost structure that will provide accelerated earnings growth."

2002 Outlook

Textron said that it expects earnings per share before special charges and restructuring-related expenses of approximately $0.45 in the first quarter of 2002 and about $3.00 for the full year. These earnings per share amounts exclude goodwill amortization consistent with the Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." Free cash flow for the year is expected to be approximately $325 million.

Segment Reorganization

Beginning in 2002, Textron will report results in a new segment format to reflect the change in its mix of businesses and a new organizational structure under which the businesses will be managed. Textron's new segment structure includes the following five reportable segments with businesses within each as follows:

    Aircraft: Bell Helicopter; Cessna; Textron Lycoming

    Fastening Systems

    Industrial Products: Textron Golf, Turf & Specialty Products; Greenlee; OmniQuip; Tempo; Textron Systems

    Industrial Components: Fluid and Power; Kautex

    Finance

To assist analysts and investors, certain quarterly 2001 financial schedules have been restated to reflect the new reportable segments and the sale of Automotive Trim and Turbine Engine Components. These schedules are available on the company's website (www.textron.com), or they can be obtained by contacting Textron's investor relations office at (401) 457-2288.

Fourth Quarter Segment Analysis

(Quarterly segment profits and margins for the Aircraft, Fastening Systems and Industrial Products segments that are discussed below are before special charges and restructuring-related expenses.)

AIRCRAFT

Aircraft segment revenues increased $140 million, while profit before restructuring-related expenses decreased $6 million.

Cessna's revenues increased $135 million due to higher sales of Citation business jets and increased spare parts and service sales. This was partially offset by lower sales of single engine piston aircraft which have been adversely affected by the weakening economy. Profit increased significantly as a result of the higher revenues and improved operating performance, partially offset by lower re-sale prices for trade-in aircraft and the reduced delivery volume of single engine piston models.

Bell Helicopter's revenues increased $5 million primarily due to higher revenue on the H-1 upgrade contracts and other sales to the U.S. Government, partially offset by lower foreign military sales. Higher sales of commercial spares were offset by lower sales of commercial helicopters. Bell's profit decreased significantly due to several factors: lower margins on the mix of commercial sales; lower foreign military sales; costs related to outsourcing the manufacture of certain parts; and lower income from a joint venture partner related to the BA609 program. Profit was also reduced as a result of Bell's ongoing development efforts related to the V-22 Engineering Manufacturing and Development and H-1 upgrade contracts as a result of revised customer and engineering requirements. A favorable LIFO inventory reserve adjustment of $8 million resulting from a reduction in LIFO inventories was offset by higher reserves related to receivables and product liability issues.

AUTOMOTIVE

For the fourth quarter, Automotive revenues decreased $42 million and profit decreased $31 million.

Trim revenues decreased $18 million primarily due to customer price reductions and an unfavorable foreign exchange impact resulting from a weaker Brazilian Real, partially offset by higher sales volume, primarily due to the launch of several cockpit programs in Europe. Profit decreased primarily due to customer price reductions, start-up costs on new programs and the unfavorable impact of foreign exchange, partially offset by the benefit of restructuring and other cost containment activities.

Fuel Systems and Components revenues decreased $24 million primarily as a result of the divestiture of non-core product lines in the fourth quarter 2000 and in the first half of 2001, customer price reductions and lower volume, partially offset by the favorable impact of foreign exchange. Profit decreased primarily due to customer price reductions, lower sales volume and the impact of a non-recurring gain on the sale of a non-core product line in the fourth quarter 2000. These negative items are partially offset by the benefit of cost reduction and restructuring activities.

FASTENING SYSTEMS

Fastening Systems revenues decreased $77 million, while profit before restructuring-related expenses decreased $57 million.

The revenue decreases were primarily due to lower volume and customer price reductions, partially offset by the favorable impact of foreign exchange. Profit decreased due to lower volumes, customer price reductions and operating inefficiencies as a result of production decreases to reduce inventory levels and the impact of smaller production lot sizes, partially offset by the benefit of restructuring.

INDUSTRIAL PRODUCTS

Industrial Products revenues and profit before restructuring-related expenses decreased $161 million and $91 million, respectively.

Revenues decreased in most of the segment's businesses due to softening demand from the depressed economy and the divestiture of Turbine Engine Components in the third quarter 2001, partially offset by the revenues from acquisitions. Profit decreased primarily due to lower volumes, operating inefficiencies as a result of production decreases to reduce inventories and higher reserves for inventory and receivables, partially offset by the benefit of restructuring.

FINANCE

Finance segment revenues increased $11 million due to higher net syndication and securitization income and a gain from a leveraged lease prepayment, partially offset by lower average yield, reflecting the lower interest rate environment. Profit increased $3 million primarily due to higher interest margin, partially offset by a higher provision for loan losses as a result of higher charge-offs.

Conference Call Information

Textron will host a conference call at 10:00 a.m. Eastern time today to discuss results and the company's outlook. This conference call will be accessible via webcast at www.textron.com or by direct dial at (800) 230-1074 in the U.S. or (612) 332-1020 outside of the U.S. (request the Textron Earnings Conference). The call will be available for playback beginning at 1:30 p.m. Eastern time on Thursday, January 24th by dialing (320) 365-3844 - Access Code 614376.

Textron Inc. is a $12 billion multi-industry company with more than 51,000 employees in 40 countries. The company leverages its global network of businesses to provide customers with innovative solutions and services in industries such as aircraft, fastening systems, industrial products, industrial components, and finance. We are known around the world for our powerful brands such as Bell Helicopter, Cessna Aircraft, Kautex, Lycoming, E-Z-GO and Greenlee, among others. More information is available at www.textron.com.

Forward-looking Information: Certain statements in this release and other oral and written statements made by Textron 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 are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following: (a) the extent to which Textron is able to achieve savings from its restructuring plans, (b) changes in worldwide economic and political conditions that impact interest and foreign exchange rates, © the occurrence of work stoppages and strikes at key facilities of Textron or Textron's customers or suppliers, (d) government funding and program approvals affecting products being developed or sold under government programs, (e) cost and delivery performance under various program and development contracts, (f) successful implementation of supply chain and other cost-reduction programs, (g) the timing of certifications of new aircraft products, (h) the occurrence of further downturns in customer markets to which Textron products are sold or supplied, (i) Textron's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by OEM customers and (j) Textron Financial's ability to maintain credit quality and control costs.

                                                            Unaudited

                             TEXTRON INC.
                REVENUES AND INCOME BY BUSINESS SEGMENT
                        FOURTH QUARTER AND YEAR
                (In millions except per share amounts)

                                    Fourth Quarter
                         December 29, 2001        December 30, 2000
                          As           As           As         As
REVENUES                 Reported   Adjusted(a)  Reported  Adjusted(a)

MANUFACTURING:
 Aircraft                $1,391       $1,391      $1,251       $1,251
 Automotive                 629          629         671          671
 Fastening                                                     
  Systems (b)               373          373         450          450
 Industrial                                                    
  Products (b)              594          594         755          755

                          2,987        2,987       3,127        3,127

FINANCE                     196          196         185          185

   Total revenues         3,183        3,183       3,312        3,312

PROFIT (LOSS)                                                  

MANUFACTURING:                                                 
 Aircraft                $  132       $  133      $  139       $  139
 Automotive                  23           23          54           54
 Fastening                                                     
  Systems (b)               (23)         (20)         37           37
 Industrial                                                    
  Products (b)              (11)          (8)         83           83

                            121          128         313          313

FINANCE                      59           59          56           56

Segment profit              180          187         369          369

Gain on Sale of                                                
 Divisions (c)              339          --         --             --
Special charges,                                               
 net (d)                    (22)         --         (483)          --
Corporate expenses                                             
 and other - net            (38)         (38)        (43)         (43)
Interest expense,                                              
 net                        (37)         (37)        (36)         (36)

Income (loss)                                                  
 before                                                        
 income taxes               422          112        (193)         290

Income taxes               (158)         (38)        (18)         (98)

Distribution on                                                
 preferred                                                     
 securities of                                                 
 manufacturing                                                 
 subsidiary                                                    
 trust, net of                                                 
 income taxes                (7)          (7)         (7)          (7)

 Net income (loss)       $  257       $   67      $ (218)      $  185

 Earnings per                                                  
  share:                                                       
  Net income                                                   
  (loss)                 $ 1.81       $ 0.47      $(1.53)      $ 1.28

 Average diluted                                               
  shares                                                 
  outstanding       142,460,000  142,460,000 141,969,000  143,846,000



                                                             Unaudited
                             TEXTRON INC.
                REVENUES AND INCOME BY BUSINESS SEGMENT
                        FOURTH QUARTER AND YEAR
                (In millions except per share amounts)

                                 Year

                        December 29, 2001       December 30, 2000
                        As          As           As          As
                     Reported    Adjusted(a)  Reported   Adjusted(a)
REVENUES

MANUFACTURING:
 Aircraft               $ 4,664      $ 4,664     $ 4,394      $ 4,394
 Automotive               2,601        2,601       2,924        2,924
 Fastening                                                    
  Systems (b)             1,679        1,679       1,996        1,996
 Industrial                                                   
  Products (b)            2,668        2,668       3,085        3,085

                         11,612       11,612      12,399       12,399

FINANCE                     709          709         691          691

  Total revenues         12,321       12,321      13,090       13,090

PROFIT                                                        

MANUFACTURING:                                                
 Aircraft               $   311      $   321     $   451          451
 Automotive                 158          162         244          244
 Fastening                                                    
  Systems (b)                46           54         175          175
 Industrial                                                   
  Products (b)              120          132         350          350

                            635          669       1,220        1,220

FINANCE                     193          193         190          190

Segment profit              828          862       1,410        1,410

Gain on Sale of                                               
 Divisions (c)              342            3         --            --
Special charges,                                              
 net  (d)                  (437)         --         (483)          --
Corporate expenses                                            
 and other - net           (152)        (152)       (164)        (164)
Interest expense,                                             
 net                       (162)        (162)       (152)        (152)

Income before                                                 
 income taxes               419          551         611        1,094

Income taxes               (227)        (193)       (308)        (388)

Distribution on                                               
 preferred                                                    
 securities                                                   
 of manufacturing                                             
 subsidiary trust,                                            
 net of income                                                
 taxes                      (26)         (26)        (26)         (26)

Income from                                                   
 continuing                                                   
 operations:                166          332         277          680

 Cumulative effect                                            
 of change in                                                 
 accounting                                                   
 principle, net of                                            
 income taxes (e)          --            --          (59)         (59)

 Net income             $   166      $   332     $   218      $   621

 Earnings per share:                                          
  Income from                                                 
   continuing                                                 
   operations:             1.16         2.32        1.90         4.65
  Cumulative effect                                           
  of change in                                                
  accounting                                                  
  principle, net of                                           
  income taxes (e)          --           --        (0.41)       (0.41)

 Net income             $  1.16      $  2.32     $  1.49      $  4.24

Average diluted                                  
 shares outstanding 142,937,000  142,937,000 146,150,000  146,150,000


(a) The "As Adjusted" column excludes restructuring-related expenses
    recorded in segment profit, expenses recorded in special charges,
    net and the gain on the sale of the Automotive Trim business.

(b) Textron reorganized management responsibility for one of its
    divisions previously reported in the Fastening Systems segment to
    the Industrial Products segment. Prior periods have been restated
    to reflect this change.

(c) In December 2001, Textron recorded a pretax gain of $339 million
    on the sale of its Automotive Trim business to Collins & Aikman
    Products Company, a subsidiary of Collins and Aikman Corporation.
    This gain has been omitted from the "As Adjusted" column to
    reflect earnings from continuing operations without the impact of
    this one-time gain.

(d) Special charges, net includes intangible and fixed asset
    impairment write-downs, accruable restructuring expenses
    associated with a) reducing overhead and closing, consolidating
    and downsizing manufacturing facilities, b) consolidating
    operations and exiting non-core product lines within the Finance
    segment and c) corporate and segment personnel reductions, and
    e-business investment losses.

(e) In January 2000, Textron adopted the Emerging Issues Task Force
    consensus EITF 99-5 which requires certain pre-production
    engineering costs to be expensed as incurred. Textron recorded the
    cumulative effect of this accounting change in January 2000.



                                                           Unaudited
                             TEXTRON INC.
                 Condensed Consolidated Balance Sheets
                             (In millions)


                             December 29, December 30,
                                 2001      2000
Assets
Cash and cash equivalents      $   241   $   282
Accounts receivable, net         1,149     1,318
Inventories                      1,727     1,871
Other current assets               917       443
Net property                     2,044     2,568
Other assets                     3,599     3,757
Textron Finance assets           6,464     6,131
        Total Assets           $16,141   $16,370

Liabilities and Shareholders' Equity
Current portion of long-term
 debt and short-term debt      $   673   $   615
Other current liabilities        2,510     2,648
Other liabilities                1,823     1,939
Long-term debt                   1,261     1,469
Textron Finance liabilities      5,427     5,193
        Total Liabilities       11,694    11,864

Obligated mandatorily
 redeemable preferred
 securities                        513       512
Total Shareholders' Equity       3,934     3,994
   Total Liabilities and
    Shareholders' Equity       $16,141   $16,370

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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