Textron Reports 2003 Results

January 29, 2004

Providence, Rhode Island - January 29, 2004 - Textron Inc. (NYSE: TXT) today reported fourth quarter 2003 income from continuing operations of $83 million or $0.60 per share, compared to fourth quarter 2002 income from continuing operations of $110 million or $0.80 per share. Including discontinued operations, fourth quarter 2003 net income was $83 million or $0.60 per share, compared with the fourth quarter 2002 net income of $131 million or $0.95 per share.

Full-year 2003 income from continuing operations was $281 million or $2.05 per share, compared to $367 million or $2.62 per share for the full-year 2002. Including discontinued operations and the cumulative effect of a change in accounting principle, full-year 2003 net income was $259 million or $1.89 per share, compared to a net loss of $124 million or a loss of $0.88 per share for full-year 2002.

Full-year 2003 revenues were $9.9 billion, down from $10.4 billion in 2002, reflecting lower sales volume of Citation business jets at Cessna, partially offset by higher revenues in the Bell, Fastening Systems and Industrial segments.

Fourth quarter 2003 earnings included $0.31 per share in after-tax costs related to restructuring. Fourth quarter 2002 results included $0.15 per share in after-tax costs related to restructuring and a $0.17 per share after-tax, non-cash charge related to Textron's common stock holdings in Collins & Aikman Corporation.

Excluding these items, fourth quarter 2003 adjusted earnings per share from continuing operations were $0.91, compared to $1.12 per share in the fourth quarter of 2002.

Full-year 2003 earnings included $0.75 per share in after-tax costs related to restructuring, a $0.07 per share after-tax charge for unamortized issuance costs related to the redemption of the $500 million Textron Capital I trust preferred securities and a $0.09 per share after-tax gain from the sale of Textron's interest in an Italian automotive joint venture. Full-year 2002 results included $0.48 per share in after-tax costs related to restructuring, a $0.16 per share after-tax, non-cash charge related to Textron's common stock holdings in Collins & Aikman Corporation and a $0.06 gain from transactions related to the divested Automotive Trim business.

Excluding these items, full-year 2003 adjusted earnings per share from continuing operations were $2.78, compared to $3.20 per share in 2002.

Cash flow from operating activities for the full-year 2003 was $681 million, compared to $495 million in 2002. Free cash flow before restructuring for the full-year 2003 was $483 million, compared to $314 million last year.

"The benefits from our transformation initiatives during the year enabled us to significantly offset the impact of a decline in business jet deliveries," said Lewis B. Campbell, Textron chairman, president and CEO.

Subsequent Event

During January, Textron liquidated its remaining common shares in Collins & Aikman Corporation. This will result in cash from investing activities of $38 million and a pre-tax gain of $12 million that will be part of special charges, both in the first quarter of 2004. The gain will not be included in as-adjusted earnings.

Outlook

Textron expects full-year 2004 revenues will be down slightly, while earnings per share from continuing operations will be between $2.85 and $3.05, up from $2.78 in 2003. First quarter earnings per share will be between $0.43 and $0.53. These estimates exclude restructuring costs and other special items. The company expects full-year 2004 cash flow from operations will be between $650 million and $700 million, resulting in free cash flow before restructuring between $450 million and $500 million.

"We expect a temporary decline in revenues in our aircraft segments this year and only a modest recovery in our other manufacturing markets. However, we expect the benefits of our transformation initiatives will result in earnings growth and solid cash flow," Campbell added.

"Looking ahead to the rest of the decade, Textron is poised to deliver strong organic growth, reflecting a full recovery in our end markets, introduction of new products, and ramp-up of our military programs at Bell. The benefits of our transformation initiatives, combined with this revenue growth will generate increasingly improved profitability and cash flow."

Presentation of Results and Outlook

In the third quarter of 2003, Textron sold certain assets and liabilities related to its remaining OmniQuip business to JLG Industries, Inc. and in the fourth quarter of 2003, Textron sold its Small Business Direct business to MBNA America Bank, N.A. Textron reclassified the aggregate financial results from these businesses as discontinued operations. Historical results from 1999 have been recast to reflect the transactions and are available for downloading on Textron's investor relations homepage at www.textron.com.

Textron presents adjusted 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, Textron incurred $65 million in pre-tax costs during the fourth 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. These costs are not directly related to ongoing business results during the quarter and are not expected to occur with any regularity or predictability.

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 (GAAP). Reconciliations of the company's results and outlook to GAAP are included below.

Fourth Quarter Segment Analysis

Bell

Bell segment revenues and profit increased $50 million and $2 million, respectively.

Revenues increased due to higher revenues in both the U.S. Government and commercial markets. U.S. Government revenues increased primarily due to higher revenues from the V-22 program, higher sales of training helicopters and higher spare parts and service sales. Commercial revenues increased primarily due to higher sales of new and used aircraft and higher sales of aircraft engines, partially offset by lower spare parts and service sales.

Segment profit increased only slightly as higher volumes were partially offset by an unfavorable mix, primarily lower commercial spare parts and service sales.

Backlog at Bell Helicopter of $1.4 billion was up from the third quarter by $227 million.

Cessna

Cessna segment revenues and profit decreased $276 million and $51 million, respectively.

Revenues decreased primarily due to lower sales volume of Citation business jets and used aircraft, partially offset by higher pricing and higher spare parts and service sales. Profit decreased primarily due to the lower sales volume, an unfavorable mix and inflation, partially offset by improved cost performance, a lower net write-down for used aircraft valuations and higher pricing.

Backlog of $4.4 billion was essentially flat with the third quarter.

Fastening Systems

Fastening Systems' revenues increased $45 million, while profit decreased $3 million.

Revenues increased due to the favorable impact of foreign exchange. Slightly higher volume was offset by lower pricing. Profit decreased primarily due to inflation and lower pricing, partially offset by improved cost performance and the favorable impact of foreign exchange.

Industrial

Industrial segment revenues increased $92 million, while profit decreased $11 million.

Revenues increased primarily due to the favorable impact of foreign exchange and higher sales volume at Kautex. Profit decreased primarily due to higher new product launch costs at two assembly plants, inflation, higher warranty provisions and higher health care costs, partially offset by other cost reductions and the favorable impact of foreign exchange.

Finance

Finance segment revenues decreased $17 million, while profit increased $2 million.

Revenues decreased primarily due to lower average finance receivables and lower syndication and securitization gains. Profit increased primarily due to a lower provision for loan losses, partially offset by lower interest margin and higher operating expense. The decrease in the provision for loan losses reflected lower portfolio growth and an improvement in portfolio quality.

Conference Call Information

Textron will host a conference call today, January 29, 2004, 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) 428-4470 in the U.S. or (651) 224-7582 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 today by dialing (320) 365-3844 Access Code: 671453. The recording will be available until midnight on April 21, 2004.

Textron Inc. is a $10 billion multi-industry company with more than 43,000 employees in 40 countries. The company leverages its global network of aircraft, industrial and finance businesses to provide customers with innovative solutions and services. 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 JANUARY 3, 2004 AND DECEMBER 28, 2002
            (Dollars in millions except per share amounts)
                              (Unaudited)

                       January 3, 2004           December 28, 2002
                  ----------------------------------------------------
                      GAAP      As Adjusted    GAAP        As Adjusted
                                    (a)                        (a)
                  ------------ ------------  ------------ ------------
REVENUES
MANUFACTURING: (b)
 Bell                  $  675       $  675        $  625      $   625
 Cessna                   620          620           896          896
 Fastening Systems        457          457           412          412
 Industrial               793          793           701          701
                  ------------ ------------  ------------ ------------
                        2,545        2,545         2,634        2,634
FINANCE                   154          154           171          171
                  ------------ ------------  ------------ ------------
   Total revenues      $2,699       $2,699        $2,805      $ 2,805
                  ============ ============  ============ ============
PROFIT
MANUFACTURING: (b)(c)
 Bell                  $   69       $   69        $   67      $    67
 Cessna                    43           43            94           94
 Fastening Systems         17           17            20           20
 Industrial                44           44            55           55
                  ------------ ------------  ------------ ------------
                          173          173           236          236
FINANCE                    52           52            50           50
                  ------------ ------------  ------------ ------------
Segment profit            225          225           286          286
Special charges (c)(d)    (65)           -           (68)           -
Corporate expenses
 and other - net          (38)         (38)          (28)         (28)
Interest expense,
 net                      (26)         (26)          (23)         (23)
                  ------------ ------------  ------------ ------------
Income from
 continuing
 operations
 before income
 taxes and
 distribution on
 preferred
 securities
 of subsidiary
 trusts                    96          161           167          235
Income taxes              (13)         (36)          (50)         (73)
Distribution on
 preferred
 securities
 of manufacturing
 subsidiary
 trust,
 net of income
 taxes (f)                  -            -            (7)          (7)
                  ------------ ------------  ------------ ------------
Income from
 continuing
 operations                83          125           110          155
Income (loss) from
 discontinued
 operations, net
 of income taxes (g)        -            -            21          (10)
                  ------------ ------------  ------------ ------------
Net income             $   83       $  125        $  131      $   145
                  ============ ============  ============ ============
Earnings per
 share: (i)
Income from
 continuing
 operations            $ 0.60       $ 0.91        $ 0.80      $  1.12
Income (loss) from
 discontinued
 operations, net
 of income taxes(g)         -            -          0.15        (0.08)
                  ------------ ------------  ------------ ------------
Net income             $ 0.60       $ 0.91        $ 0.95      $  1.04
                  ============ ============  ============ ============
Average diluted
 shares
 outstanding      138,326,000  138,326,000   138,362,000  138,362,000
                  ============ ============  ============ ============


                             TEXTRON INC.
                REVENUES AND INCOME BY BUSINESS SEGMENT
       TWELVE MONTHS ENDED JANUARY 3, 2004 AND DECEMBER 28, 2002
            (Dollars in millions except per share amounts)
                              (Unaudited)

                       January 3, 2004           December 28, 2002
                  ----------------------------------------------------
                      GAAP     As Adjusted       GAAP     As Adjusted
                                    (a)                        (a)
                  ------------ ------------  ------------ ------------
REVENUES
MANUFACTURING: (b)
 Bell                 $ 2,348       $2,348       $ 2,235      $ 2,535
 Cessna                 2,299        2,299         3,175        3,175
 Fastening Systems      1,737        1,737         1,650        1,650
 Industrial             2,903        2,903         2,706        2,706
                  ------------ ------------  ------------ ------------
                        9,287        9,287         9,766        9,766
FINANCE                   572          572           584          584
                  ------------ ------------  ------------ ------------
   Total revenues     $ 9,859       $9,859       $10,350      $10,350
                  ============ ============  ============ ============
PROFIT
MANUFACTURING:(b)(c)
 Bell                 $   234       $  234       $   169      $   169
 Cessna                   199          199           376          376
 Fastening Systems         66           66            72           72
 Industrial               141          141           163          163
                  ------------ ------------  ------------ ------------
                          640          640           780          780
FINANCE                   122          122           118          118
                  ------------ ------------  ------------ ------------
Segment profit            762          762           898          898
Special charges(c)(d)    (159)           -          (135)           -
Gain on sale of
 businesses (e)            15            -            25            -
Corporate expenses
 and other - net         (119)        (119)         (114)        (114)
Interest expense,
 net                      (98)         (98)         (108)        (108)
                  ------------ ------------  ------------ ------------
Income from
 continuing
 operations
 before income
 taxes and
 distribution on
 preferred
 securities
 of subsidiary
 trusts                   401          545           566          676
Income taxes             (107)        (151)         (173)        (201)
Distribution on
 preferred
 securities
 of manufacturing
 subsidiary
 trust,
 net of income
 taxes (f)                (13)         (13)          (26)         (26)
                  ------------ ------------  ------------ ------------
Income from
 continuing
 operations               281          381           367          449
Income (loss) from
 discontinued
 operations, net
 of income taxes (g)      (22)           2            (3)         (27)
Cumulative effect
 of a change in
 accounting
 principle, net
 of income
 taxes (h)                  -            -          (488)           -
                  ------------ ------------  ------------ ------------
Net income (loss)     $   259       $  383       $  (124)     $   422
                  ============ ============  ============ ============
Earnings per
 share: (i)
Income from
 continuing
 operations           $  2.05       $ 2.78       $  2.62      $  3.20
Income (loss) from
 discontinued
 operations, net
 of income taxes(g)     (0.16)        0.01         (0.02)       (0.19)
Cumulative effect
 of a change in
 accounting
 principle, net
 of income
 taxes (h)                  -            -         (3.48)           -
                  ------------ ------------  ------------ ------------
Net income (loss)     $  1.89       $ 2.79       $ (0.88)     $  3.01
                  ============ ============  ============ ============
Average diluted
 shares
 outstanding      137,217,000  137,217,000   140,252,000  140,252,000
                  ============ ============  ============ ============


                             TEXTRON INC.
                REVENUES AND INCOME BY BUSINESS SEGMENT
  THREE AND TWLEVE MONTHS ENDED JANUARY 3, 2004 AND DECEMBER 28, 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, the cumulative effect
        of change in accounting principle and amounts previously
        recorded as special charges that have been reclassified as
        discontinued operations. 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 income from continuing operations, as adjusted is as
        follows:

                                                Fourth     Full Year
                                                Quarter
                                              ----------- ------------
                                              2003  2002  2003   2002
                                              ----- ----- ----- ------
  GAAP net income (loss)                      $ 83  $131  $259  $(124)
  Adjustments:
    Special charges                             65    68   159    135
    Gain on sale of businesses                   -     -   (15)   (25)
    Tax impact of excluded items               (23)  (23)  (44)   (28)
    Discontinued operations, net of income
     taxes                                       -   (21)   22      3
    Cumulative effect of change in accounting
      principle, net of income taxes             -     -     -    488
                                              ----- ----- ----- ------
  Income from continuing operations, as
   adjusted                                   $125  $155  $381  $ 449
                                              ===== ===== ===== ======

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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