Textron Reports Second Quarter Results

July 17, 2003

Providence, Rhode Island - July 17, 2003 - Textron Inc. (NYSE: TXT) today reported that second quarter 2003 earnings per share were $0.46 and net income was $63 million, compared to second quarter 2002 earnings per share of $0.74 and net income of $105 million.

Revenues were $2.6 billion, down from $2.8 billion in 2002, as higher revenues at Bell, Fastening Systems, Industrial and Finance were offset by lower revenues at Cessna.

Second quarter 2003 earnings included $0.12 per share in after-tax costs related to restructuring and an $0.18 per share after-tax charge for asset impairment related to the company's announced sale of the OmniQuip telescopic material handler business. Second quarter 2002 results included $0.14 per share in after-tax costs related to restructuring and a $0.06 per share after-tax gain related to transactions associated with the divested Automotive Trim business.

Excluding these items, second quarter 2003 adjusted earnings per share were $0.76, compared to $0.82 per share in the second quarter of 2002.

Cash flow from operations for the first six months of 2003 was $137 million, compared to $17 million during the same period last year, resulting in free cash flow before restructuring for the first six months of 2003 of $75 million, compared to a use of cash of $76 million last year.

"We continue to focus on improving our processes, organization and infrastructure to permanently take costs out of our business," said Lewis B. Campbell, Textron chairman, president and CEO. "We will stay the course of reducing costs and improving efficiencies to offset the continued, expected softness in our overall revenues and to position the company for accelerated performance when end markets improve."

Campbell added, "In the meantime, our investment in future organic growth continues unabated, as we develop new products such as the CJ3, Sovereign and Mustang business jets; the V-22, 609 and Eagle Eye tiltrotor aircraft; next-generation interactive fuel systems; and low-noise, electric turf mowers."

Presentation of Results and Outlook

Textron presents its results and outlook before restructuring costs and other special items because such items are outside normal business operations, as well as difficult to forecast accurately for specific periods. Such items are either isolated or temporary in nature. Therefore, it is helpful to understand results without these items, especially when comparing results to previous periods or forecasting performance in future periods.

For example, during the second quarter of 2003, Textron recognized a $30 million pre-tax impairment charge related to the announced sale of the OmniQuip telescopic material handler business. This charge was not directly related to ongoing business results during the quarter, and charges such as this are not expected to occur with any regularity or predictability.

Similarly, Textron incurred $24 million in pre-tax costs during the second quarter for its restructuring program. The restructuring program, which is designed to reduce overhead costs and rationalize manufacturing facilities, is expected to be substantially complete in 2004. During the execution of the restructuring program, the company is incurring costs that are supplementary to the ongoing operating costs of the business.

Results before restructuring costs and other special items are also the basis for measuring operating performance for management compensation purposes. However, analysis of the company's results and outlook before restructuring costs and other special items should be used only in conjunction with data presented in accordance with Generally Accepted Accounting Principles. Reconciliations of the company's results and outlook to GAAP are attached.

Outlook

Textron expects full-year 2003 earnings per share will be between $2.40 and $2.60, with third quarter 2003 earnings per share between $0.42 and $0.52. These estimates exclude restructuring costs and other special items. The company expects full-year 2003 cash flow from operations will be between $516 million and $616 million, resulting in free cash flow before restructuring between $300 million and $400 million.

Second Quarter Segment Analysis

Textron has reorganized in order to streamline its management structure. Under the new structure, Textron Systems and Lycoming have been combined with Bell Helicopter to form a new Bell segment and Cessna Aircraft is being reported separately. The remaining Industrial Products and Industrial Components businesses have been combined and Textron now reports the following segments: Bell, Cessna, Fastening Systems, Industrial and Finance.

Historical results from 1998 through the present have been recast to reflect the new structure and are available for downloading from Textron's investor relations homepage at www.textron.com.

Bell

Bell segment revenues and profit increased $23 million and $11 million, respectively.

Revenues increased due to higher commercial and U.S. Government revenues at Bell Helicopter, partially offset by lower volumes at Textron Systems and Lycoming. At Bell Helicopter, commercial revenues increased primarily due to higher foreign military sales and higher commercial aircraft sales, partially offset by lower commercial spares and service sales. U. S. Government revenues increased due to higher revenues from the V-22 and other U.S. Government programs, partially offset by lower revenues from the H-1 upgrade. Segment profit increased primarily due to pricing and program related adjustments in 2002, principally in the commercial helicopter business, partially offset by lower volume and increased costs at Lycoming.

Backlog at Bell Helicopter of $1.2 billion was down from the first quarter by $180 million.

Cessna

Cessna segment revenues and profit decreased $282 million and $55 million, respectively.

Revenues decreased primarily due to lower sales volume of Citation business jets, partially offset by higher pricing and higher used aircraft sales. Profit decreased primarily due to the lower sales volume, partially offset by improved cost performance and higher pricing.

Backlog of $4.2 billion was down from the first quarter by $150 million.

Fastening Systems

Fastening Systems' revenues increased $16 million, while profit was unchanged.

Sales volume was lower but revenues increased primarily due to the favorable impact of foreign exchange. Profit was unchanged as the impact of lower sales volume and inflation was offset primarily by improved cost performance.

Industrial

Industrial segment revenues and profit increased $11 million and $23 million, respectively.

Revenues increased primarily due to the favorable impact of foreign exchange and higher sales volume at Kautex, partially offset by lower sales volume at OmniQuip and Golf and Turf. Profit increased primarily due to improved cost performance and lower expenses for bad debt and obsolete inventory, partially offset by the lower unit sales volume, inflation and an unfavorable sales mix.

Finance

Finance segment revenues increased $7 million, while profit decreased $3 million.

Revenues increased primarily due to higher average receivables. Profit decreased due to a higher provision for loan losses and higher operating expense, partially offset by increased interest margin due to higher average finance receivables, higher pricing and lower borrowing costs.

Conference Call Information

Textron will host a conference call today, July 17, at 9:00 a.m. Eastern time to discuss the company's results and outlook. The call will be available via webcast at www.textron.com or by direct dial at (888) 428-4474 in the U.S. or (651) 291-0344 outside of the U.S. (request the Textron Earnings Conference). The call will be recorded and available for playback beginning at 12:30 p.m. Eastern time on July 17, by dialing (320) 365-3844 - Access Code: 671442. The recording will be available until midnight on October 15, 2003.

Textron Inc. is an $11 billion multi-industry company with 49,000 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 and components and finance. Textron is known around the world for its 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) uncertainty in estimating the amount and timing of restructuring charges and related costs; ( c ) changes in worldwide economic and political conditions that impact interest and foreign exchange rates; (d) the occurrence of work stoppages and strikes at key facilities of Textron or Textron's customers or suppliers; (e) government funding and program approvals affecting products being developed or sold under government programs; (f) cost and delivery performance under various program and development contracts; (g) the adequacy of cost estimates for various customer care programs including servicing warranties; (h) the ability to control costs and successful implementation of various cost reduction programs; (i) the timing of certifications of new aircraft products; (j) the occurrence of further downturns in customer markets to which Textron products are sold or supplied or where Textron Financial offers financing; (k) changes in aircraft delivery schedules or cancellation of orders (l) Textron's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers; (m) the availability and cost of insurance; (n) pension plan income falling below current forecasts; (o) Textron Financial's ability to maintain portfolio credit quality; (p) Textron Financial's access to debt financing at competitive rates; and (q) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies.

 TEXTRON INC.
                REVENUES AND INCOME BY BUSINESS SEGMENT
          THREE MONTHS ENDED JUNE 28, 2003 AND JUNE 29, 2002
            (Dollars in millions except per share amounts)
                              (Unaudited)

                           June 28, 2003 June 29, 2002
                      ------------------------------------------------
                          GAAP    As Adjusted      GAAP   As Adjusted
                                       (a)                     (a)
                      ------------------------------------------------
REVENUES
MANUFACTURING: (b)
 Bell                      $  616 $  616 $  593 $  593
 Cessna                       575         575          857        857
 Fastening Systems            447         447          431        431
 Industrial                   806         806          795        795
                      ------------------------------------------------
                            2,444       2,444        2,676      2,676
FINANCE                       155         155          148        148
                      ------------------------------------------------
   Total revenues          $2,599 $2,599 $2,824 $2,824
                      ================================================
PROFIT
MANUFACTURING: (b)(c)
 Bell                      $   56 $   56 $   45 $   45
 Cessna                        66          66          121        121
 Fastening Systems             21          21           21         21
 Industrial                    42          42           19         19
                      ------------------------------------------------
                              185         185          206        206
FINANCE                        26          26           29         29
                      ------------------------------------------------
Segment profit                211         211          235        235
Special charges (c)(d)        (54)          -          (29)         -
Gain on sale of
 business (e)                   -           -           25          -
Corporate expenses and
 other - net                  (30)        (30)         (31)       (31)
Interest expense, net         (22)        (22)         (25)       (25)
                      ------------------------------------------------
Income before income
 taxes                        105         159          175        179
Income taxes                  (35)        (49)         (63)       (56)
Distribution on
 preferred securities
 of manufacturing
  subsidiary trust,
 net of income taxes           (7)         (7)          (7)        (7)
                      ------------------------------------------------
Net income                 $   63 $  103 $  105 $  116
                      ================================================
Earnings per share: (g)
 Net income                $ 0.46 $ 0.76 $ 0.74 $ 0.82
                      ------======------======------======------======
Average diluted shares
 outstanding          136,257,000 136,257,000  141,599,000 141,599,000
                      ================================================


                             TEXTRON INC.
                REVENUES AND INCOME BY BUSINESS SEGMENT
           SIX MONTHS ENDED JUNE 28, 2003 AND JUNE 29, 2002
            (Dollars in millions except per share amounts)
                              (Unaudited)

                           June 28, 2003 June 29, 2002
                      ------------------------------------------------
                          GAAP    As Adjusted      GAAP   As Adjusted
                                       (a)                     (a)
                      ------------------------------------------------
REVENUES
MANUFACTURING: (b)
 Bell                      $1,152 $1,152 $ 1,084 $1,084
 Cessna                     1,163       1,163        1,534      1,534
 Fastening Systems            876         876          827        827
 Industrial                 1,559       1,559        1,504      1,504
                      ------------------------------------------------
                            4,750       4,750        4,949      4,949
FINANCE                       306         306          293        293
                      ------------------------------------------------
   Total revenues          $5,056 $5,056 $ 5,242 $5,242
                      ================================================
PROFIT
MANUFACTURING: (b)(c)
 Bell                      $   96 $   96 $    69 $   69
 Cessna                       125         125          198        198
 Fastening Systems             39          39           31         31
 Industrial                    75          75           51         51
                      ------------------------------------------------
                              335         335          349        349
FINANCE                        49          49           51         51
                      ------------------------------------------------
Segment profit                384         384          400        400
Special charges (c)(d)        (82)          -          (43)         -
Gain on sale of
 businesses (e)                15           -           25          -
Corporate expenses and
 other - net                  (62)        (62)         (60)       (60)
Interest expense, net         (46)        (46)         (55)       (55)
                      ------------------------------------------------
Income before income
 taxes                        209         276          267        285
Income taxes                  (67)        (86)         (92)       (90)
Distribution on
 preferred securities
 of manufacturing
  subsidiary trust,
 net of income taxes          (13)        (13)         (13)       (13)
                      ------------------------------------------------
Income from continuing
 operations                   129         177          162        182
Cumulative effect of a
 change in accounting
 principle, net of income
 taxes (f)                      -           -         (488)         -
                      ------------------------------------------------
Net income (loss)          $  129 $  177      $  (326)    $  182
                      ================================================
Earnings per share: (g)
 Income from continuing
  operations               $ 0.94 $ 1.30 $  1.14 $ 1.29
 Cumulative effect of
  a change in accounting
    principle, net of
    income taxes (f)            -           -        (3.44)         -
                      ------------------------------------------------
 Net income (loss)         $ 0.94 $ 1.30      $ (2.30)    $ 1.29
                      ------======------======-----=======------======
Average diluted shares
 outstanding          136,659,000 136,659,000  141,682,000 141,682,000
                      ================================================


                             TEXTRON INC.
                REVENUES AND INCOME BY BUSINESS SEGMENT
      THREE AND SIX MONTHS ENDED JUNE 28, 2003 AND JUNE 29, 2002
            (Dollars in millions except per share amounts)
                              (Unaudited)

(a) The "As Adjusted" column excludes items recorded in special
    charges, the gain on sale of businesses and the cumulative effect
    of change in accounting principle. Textron presents its results
    "as adjusted", before restructuring and other special items,
    because such items are outside normal business operations, as well
    as difficult to forecast accurately for specific periods. Such
    items are either isolated or temporary in nature; therefore, it is
    helpful to understand results without these items, especially when
    comparing results for previous periods or forecasting performance
    in future periods. In addition, Textron uses "as adjusted" results
    to measure operating performance for management compensation
    purposes. Any analysis of results before restructuring costs and
    other special items should be used only in conjunction with data
    presented in accordance with Generally Accepted Accounting
    Principles (GAAP).

    A reconciliation of net income as reported under GAAP to net
    income, as adjusted is as follows:

                                      Second Quarter    Six Months
                                      -------------------------------
                                       2003    2002    2003    2002
                                      -------------------------------
GAAP net income (loss)                $  63 $ 105 $  129 $  (326)
Adjustments:
  Special charges                        54      29       82      43
  Gain on sale of businesses              -     (25)     (15)    (25)
  Tax impact of excluded items          (14)      7      (19)      2
  Cumulative effect of change in
    accounting principle, net of taxes    -       -        -     488
                                      ------------------------------
Net income, as adjusted               $ 103 $ 116 $  177 $   182
                                      ==============================


(b) In June 2003, Textron reorganized its segments in order to
    streamline the management reporting structure. Under the new
    structure, Textron Systems and Textron Lycoming have been combined
    with Bell Helicopter to form the new Bell segment and Cessna
    Aircraft has been reported separately as a new segment. The
    remaining Industrial Products and Industrial Components businesses
    have been combined to form the new Industrial segment. Textron now
    reports under the following segments: Bell, Cessna, Fastening
    Systems, Industrial and Finance. Prior periods have been recast to
    reflect this change.

(c) Effective December 29, 2002, Textron adopted Statement of
    Financial Accounting Standard (SFAS) No. 146, "Accounting for
    Costs Associated with Exit or Disposal Activities". Upon adoption,
    costs related to restructuring that were previously recorded in
    segment profit are now included with severance costs, contract
    termination costs, and asset impairment write-downs in special
    charges. Costs related to restructuring that were recorded in
    segment profit in prior periods have been reclassified to special
    charges to conform to this presentation.

(d) Special charges include restructuring expenses and fixed asset
    impairment write-downs associated with reducing overhead and
    closing, consolidating and downsizing manufacturing facilities,
    reducing corporate and segment personnel, consolidating operations
    and exiting non-core product lines. Also included is a goodwill
    and intangible asset impairment charge of $30 million recorded in
    the second quarter of 2003 related to OmniQuip.

(e) In the first quarter of 2003, Textron recorded a gain on the sale
    of its interest in an Italian automotive joint venture to Collins
    & Aikman. Textron also sold its Automotive Trim business to
    Collins & Aikman in the fourth quarter of 2001 and recorded an
    adjustment to the gain in the second quarter of 2002 as a result
    of transactions associated with the divestiture.

(f) With the implementation of SFAS No. 142, "Goodwill and Other
    Intangible Assets", Textron recorded a $488 million after-tax
    transitional goodwill impairment charge comprised of $385 million
    in the Industrial segment, $88 million in the Fastening Systems
    segment and $15 million in the Finance segment.


                             TEXTRON INC.
                REVENUES AND INCOME BY BUSINESS SEGMENT
      THREE AND SIX MONTHS ENDED JUNE 28, 2003 AND JUNE 29, 2002
            (Dollars in millions except per share amounts)
                              (Unaudited)

(g) Reconciliation of GAAP EPS to EPS, as adjusted:

                                    Second Quarter    Six Months
                                 -----------------------------------
                                     2003    2002    2003     2002
                                 -----------------------------------
GAAP EPS                           $ 0.46 $ 0.74 $  0.94  $ (2.30)
Adjustments:
  Special charges                    0.30    0.14     0.45     0.21
  Gain on sale of business              -   (0.06)   (0.09)   (0.06)
  Cumulative effect of change in
    accounting principle                -       -        -     3.44
                                 -----------------------------------
EPS, as adjusted                   $ 0.76 $ 0.82 $  1.30 $  1.29
                                 ===================================


                             TEXTRON INC.
                 Condensed Consolidated Balance Sheets
                             (In millions)
                              (Unaudited)
                                                June 28,     Dec. 28,
                                                  2003         2002
                                               ----------- -----------
Assets
Cash and cash equivalents                            $325 $286
Accounts receivable, net                            1,385       1,180
Inventories                                         1,626       1,611
Other current assets                                  578         810
Net property                                        1,961       1,981
Other assets                                        3,050       2,983
Textron Finance assets                              7,001       6,654
                                               ----------- -----------
      Total Assets                                $15,926 $15,505
                                               =========== ===========

Liabilities and Shareholders' Equity
Obligated mandatorily redeemable preferred
 securities                                         $ 485         $ -
Current portion of long-term debt and short-
 term debt                                             27          25
Other current liabilities                           2,126       2,214
Other liabilities                                   2,042       2,055
Long-term debt                                      1,746       1,686
Textron Finance liabilities                         5,930       5,607
                                               ----------- -----------
      Total Liabilities                            12,356      11,587

Obligated mandatorily redeemable preferred
 securities                                            27         512
Total Shareholders' Equity                          3,543       3,406
                                               ----------- -----------
      Total Liabilities and Shareholders'
       Equity                                     $15,926 $15,505
                                               =========== ===========




                             Textron Inc.
         Reconciliation of GAAP Measures to Non-GAAP Measures
            (Dollars in millions except per share amounts)



                                   Third Quarter         Full  Year
                                --------------------------------------
                                    2003     2002       2003     2002
                                  Outlook   Actual    Outlook   Actual
----------------------------------------------------------------------
GAAP EPS                        $.16 - .26   $.51  $1.52 - 1.72 $(.88)
Adjustments:
 Gain on sale of businesses              -      -          (.09) (.31)
 Special charges                       .26    .17           .97   .72
 Cumulative effect of change in
  accounting
   principle, net of income
    taxes                                -      -             -  3.48
----------------------------------------------------------------------
EPS, as adjusted                $.42 - .52   $.68  $2.40 - 2.60 $3.01
----------------------------------------------------------------------




                       Second Quarter  June Year-to-Date   Full Year

                       -----------------------------------------------
                         2003    2002   2003   2002     2003     2002
                        Actual  Actual Actual Actual  Outlook   Actual
----------------------------------------------------------------------
Cash flow from
 operations - GAAP(a)    $180 $198 $137 $17 $516 - 616   $504
 Capital expenditures
  and lease
   additions              (73)   (79)  (118)  (142)       (328)  (302)
 Proceeds on sale of
  fixed assets             20      2     29     26          29     67
----------------------------------------------------------------------
Free cash flow after
 restructuring           $127 $121 $48   $(99) $217 - 317   $269
After-tax cash used for
 restructuring
 activities                16     12     27     23          83     60
----------------------------------------------------------------------
Free cash flow before
 restructuring
 - as adjusted           $143 $133 $75   $(76) $300 - 400   $329
----------------------------------------------------------------------

(a) Due to the increasing significance of foreign exchange rate
fluctuations on cash and cash equivalents, Textron now separately
reports the effect of foreign exchange rate changes on cash and cash
equivalents from its cash flow from operations. Prior period amounts
have been reclassified to conform to this new presentation.

Connect with Textron IR

David Rosenberg, Vice President, Investor Relations
(401) 457-2288
Kyle Williams, Manager, Investor Relations
(401) 457-2288

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