TEXTRON INC.
Revenues by Segment and Reconciliation of Segment Profit to Net Income (Dollars in millions, except per share amounts) (Unaudited) |
|||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||
January 4,
2020 |
December 29,
2018 |
January 4,
2020 |
December 29,
2018 |
||||||||||||||||||||||
REVENUES | |||||||||||||||||||||||||
MANUFACTURING: | |||||||||||||||||||||||||
Textron Aviation | $ |
|
1,729 |
|
$ |
|
1,552 |
|
$ |
|
5,187 |
|
$ |
|
4,971 |
|
|||||||||
Bell |
|
961 |
|
|
827 |
|
|
3,254 |
|
|
3,180 |
|
|||||||||||||
Textron Systems |
|
399 |
|
|
345 |
|
|
1,325 |
|
|
1,464 |
|
|||||||||||||
Industrial |
|
927 |
|
|
1,008 |
|
|
3,798 |
|
|
4,291 |
|
|||||||||||||
|
4,016 |
|
|
3,732 |
|
|
13,564 |
|
|
13,906 |
|
||||||||||||||
FINANCE |
|
19 |
|
|
18 |
|
|
66 |
|
|
66 |
|
|||||||||||||
Total revenues | $ |
|
4,035 |
|
$ |
|
3,750 |
|
$ |
|
13,630 |
|
$ |
|
13,972 |
|
|||||||||
SEGMENT PROFIT | |||||||||||||||||||||||||
MANUFACTURING: | |||||||||||||||||||||||||
Textron Aviation | $ |
|
134 |
|
$ |
|
170 |
|
$ |
|
449 |
|
$ |
|
445 |
|
|||||||||
Bell |
|
118 |
|
|
108 |
|
|
435 |
|
|
425 |
|
|||||||||||||
Textron Systems |
|
33 |
|
|
37 |
|
|
141 |
|
|
156 |
|
|||||||||||||
Industrial |
|
44 |
|
|
73 |
|
|
217 |
|
|
218 |
|
|||||||||||||
|
329 |
|
|
388 |
|
|
1,242 |
|
|
1,244 |
|
||||||||||||||
FINANCE |
|
11 |
|
|
9 |
|
|
28 |
|
|
23 |
|
|||||||||||||
Segment Profit |
|
340 |
|
|
397 |
|
|
1,270 |
|
|
1,267 |
|
|||||||||||||
Corporate expenses and other, net |
|
(22 |
) |
|
(12 |
) |
|
(110 |
) |
|
(119 |
) |
|||||||||||||
Interest expense, net for Manufacturing group |
|
(36 |
) |
|
(34 |
) |
|
(146 |
) |
|
(135 |
) |
|||||||||||||
Special charges (a) |
|
(72 |
) |
|
(73 |
) |
|
(72 |
) |
|
(73 |
) |
|||||||||||||
Gain on business disposition (b) |
|
- |
|
|
- |
|
|
- |
|
|
444 |
|
|||||||||||||
Income before income taxes |
|
210 |
|
|
278 |
|
|
942 |
|
|
1,384 |
|
|||||||||||||
Income tax expense (c) |
|
(11 |
) |
|
(32 |
) |
|
(127 |
) |
|
(162 |
) |
|||||||||||||
Net Income | $ |
|
199 |
|
$ |
|
246 |
|
$ |
|
815 |
|
$ |
|
1,222 |
|
|||||||||
Earnings Per Share | $ |
|
0.87 |
|
$ |
|
1.02 |
|
$ |
|
3.50 |
|
$ |
|
4.83 |
|
|||||||||
Diluted average shares outstanding |
|
229,790,000 |
|
|
242,569,000 |
|
|
232,709,000 |
|
|
253,237,000 |
|
|||||||||||||
Net Income and Diluted Earnings Per Share GAAP to Non-GAAP Reconciliation: | |||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||
January 4,
2020 |
December 29,
2018 |
January 4,
2020 |
December 29,
2018 |
||||||||||||||||||||||
Net income - GAAP | $ |
|
199 |
|
$ |
|
246 |
|
$ |
|
815 |
|
$ |
|
1,222 |
|
|||||||||
Special charges, net of income taxes of $17 million for each period (a) |
|
55 |
|
|
56 |
|
|
55 |
|
|
56 |
|
|||||||||||||
Gain on business disposition, net of income tax expense (benefit) of | |||||||||||||||||||||||||
$(9) million and $25 million, respectively (b) |
|
- |
|
|
(9 |
) |
|
- |
|
|
(419 |
) |
|||||||||||||
Income tax benefit resulting from the Tax Cuts and Jobs Act (c) |
|
- |
|
|
(14 |
) |
|
- |
|
|
(14 |
) |
|||||||||||||
Adjusted net income - Non-GAAP (d) | $ |
|
254 |
|
$ |
|
279 |
|
$ |
|
870 |
|
$ |
|
845 |
|
|||||||||
Earnings per share: | |||||||||||||||||||||||||
Net income - GAAP | $ |
|
0.87 |
|
$ |
|
1.02 |
|
$ |
|
3.50 |
|
$ |
|
4.83 |
|
|||||||||
Special charges, net of income taxes |
|
0.24 |
|
|
0.23 |
|
|
0.24 |
|
|
0.22 |
|
|||||||||||||
Gain on business disposition, net of income taxes |
|
- |
|
|
(0.04 |
) |
|
- |
|
|
(1.65 |
) |
|||||||||||||
Income tax benefit resulting from the Tax Cuts and Jobs Act |
|
- |
|
|
(0.06 |
) |
|
- |
|
|
(0.06 |
) |
|||||||||||||
Net income - Non-GAAP (d) | $ |
|
1.11 |
|
$ |
|
1.15 |
|
$ |
|
3.74 |
|
$ |
|
3.34 |
|
|||||||||
(a) | In the fourth quarter of 2019, we recorded special charges of $72 million under a restructuring plan, principally impacting the Industrial and Textron Aviation segments. Special charges of $73 million were recorded in the fourth quarter of 2018 under a restructuring plan for the Textron Specialized Vehicles businesses within our Industrial segment. | |||||||||||||
(b) | On July 2, 2018, Textron completed the sale of the Tools & Test Equipment product line which resulted in an after tax gain of $419 million. | |||||||||||||
(c) | In the fourth quarter of 2018, we completed our analysis of the tax reform legislation enacted in 2017, known as the Tax Cuts and Jobs Act, and recorded a $14 million income tax benefit. | |||||||||||||
(d) | Adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures as defined in "Non-GAAP Financial Measures" attached to this release. | |||||||||||||
Textron Inc. | ||||||||||
Condensed Consolidated Balance Sheets | ||||||||||
(In millions) | ||||||||||
(Unaudited) | ||||||||||
January 4,
2020 |
December 29, 2018 |
|||||||||
Assets | ||||||||||
Cash and equivalents | $ |
|
1,181 |
$ |
|
987 |
||||
Accounts receivable, net | 921 |
1,024 |
||||||||
Inventories | 4,069 |
3,818 |
||||||||
Other current assets | 894 |
785 |
||||||||
Net property, plant and equipment | 2,527 |
2,615 |
||||||||
Goodwill | 2,150 |
2,218 |
||||||||
Other assets | 2,312 |
1,800 |
||||||||
Finance group assets | 964 |
1,017 |
||||||||
Total Assets | $ |
|
15,018 |
$ |
|
14,264 |
||||
Liabilities and Shareholders' Equity | ||||||||||
Current portion of long-term debt | $ |
|
561 |
$ |
|
258 |
||||
Current liabilities | 3,285 |
3,248 |
||||||||
Other liabilities | 2,288 |
1,932 |
||||||||
Long-term debt | 2,563 |
2,808 |
||||||||
Finance group liabilities | 803 |
826 |
||||||||
Total Liabilities | 9,500 |
9,072 |
||||||||
Total Shareholders' Equity | 5,518 |
5,192 |
||||||||
Total Liabilities and Shareholders' Equity | $ |
|
15,018 |
$ |
|
14,264 |
||||
TEXTRON INC. |
|||||||||||
MANUFACTURING GROUP |
|||||||||||
Condensed Schedule of Cash Flows |
|||||||||||
(In millions) |
|||||||||||
(Unaudited) |
|||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||
January 4, | December 29, | January 4, | December 29, | ||||||||
2020 |
2018 |
2020 |
2018 |
||||||||
Cash flows from operating activities: | |||||||||||
Income from continuing operations | $ 190 |
$ 239 |
$ 793 |
$ 1,198 |
|||||||
Depreciation and amortization | 113 |
113 |
410 |
429 |
|||||||
Changes in working capital | 460 |
1 |
(380) |
(203) |
|||||||
Changes in other assets and liabilities and non-cash items | (8) |
40 |
87 |
97 |
|||||||
Gain on business disposition | - |
- |
- |
(444) |
|||||||
Dividends received from TFC | - |
- |
50 |
50 |
|||||||
Net cash from operating activities of continuing operations | 755 |
393 |
960 |
1,127 |
|||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (123) |
(136) |
(339) |
(369) |
|||||||
Net proceeds from business disposition | - |
- |
- |
807 |
|||||||
Net cash (used)/proceeds from corporate-owned life insurance policies | (2) |
12 |
2 |
110 |
|||||||
Proceeds from the sale of property, plant and equipment | 3 |
2 |
9 |
14 |
|||||||
Net cash used in acquisitions | (2) |
(20) |
(2) |
(23) |
|||||||
Other investing activities, net | 1 |
- |
1 |
- |
|||||||
Net cash from investing activities | (123) |
(142) |
(329) |
539 |
|||||||
Cash flows from financing activities: | |||||||||||
Decrease in short-term debt | (118) |
- |
- |
- |
|||||||
Net proceeds from long-term debt | 4 |
- |
301 |
- |
|||||||
Principal payments on long-term debt | (252) |
(1) |
(252) |
(5) |
|||||||
Purchases of Textron common stock | (33) |
(400) |
(503) |
(1,783) |
|||||||
Other financing activities, net | 7 |
(3) |
15 |
50 |
|||||||
Net cash from financing activities | (392) |
(404) |
(439) |
(1,738) |
|||||||
Total cash flows from continuing operations | 240 |
(153) |
192 |
(72) |
|||||||
Total cash flows from discontinued operations | - |
(1) |
(2) |
(2) |
|||||||
Effect of exchange rate changes on cash and equivalents | 10 |
(9) |
4 |
(18) |
|||||||
Net change in cash and equivalents | 250 |
(163) |
194 |
(92) |
|||||||
Cash and equivalents at beginning of period | 931 |
1,150 |
987 |
1,079 |
|||||||
Cash and equivalents at end of period | $ 1,181 |
$ 987 |
$ 1,181 |
$ 987 |
|||||||
Manufacturing Cash Flow GAAP to Non-GAAP Reconciliation: | |||||||||||
Net cash from operating activities of continuing operations - GAAP | $ 755 |
$ 393 |
$ 960 |
$ 1,127 |
|||||||
Less: | Capital expenditures | (123) |
(136) |
(339) |
(369) |
||||||
Dividends received from TFC | - |
- |
(50) |
(50) |
|||||||
Plus: | Total pension contributions | 15 |
15 |
51 |
52 |
||||||
Taxes paid on gain on business disposition | - |
10 |
11 |
10 |
|||||||
Proceeds from the sale of property, plant and equipment | 3 |
2 |
9 |
14 |
|||||||
Manufacturing cash flow before pension contributions - Non-GAAP (a) | $ 650 |
$ 284 |
$ 642 |
$ 784 |
|||||||
(a) | Manufacturing cash flow before pension contributions is a non-GAAP financial measure as defined in "Non-GAAP Financial Measures" attached to this release. |
TEXTRON INC. | |||||||||||||||||||
Condensed Consolidated Schedule of Cash Flows | |||||||||||||||||||
(In millions) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
January 4, | December 29, | January 4, | December 29, | ||||||||||||||||
2020 |
2018 |
2020 |
2018 |
||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Income from continuing operations | $ |
199 |
|
$ |
246 |
|
$ |
815 |
|
$ |
1,222 |
|
|||||||
Depreciation and amortization |
|
114 |
|
|
115 |
|
|
416 |
|
|
437 |
|
|||||||
Changes in working capital |
|
490 |
|
|
12 |
|
|
(297 |
) |
|
(202 |
) |
|||||||
Changes in other assets and liabilities and non-cash items |
|
(12 |
) |
|
39 |
|
|
82 |
|
|
96 |
|
|||||||
Gain on business disposition |
|
- |
|
|
- |
|
|
- |
|
|
(444 |
) |
|||||||
Net cash from operating activities of continuing operations |
|
791 |
|
|
412 |
|
|
1,016 |
|
|
1,109 |
|
|||||||
Cash flows from investing activities: | |||||||||||||||||||
Capital expenditures |
|
(123 |
) |
|
(136 |
) |
|
(339 |
) |
|
(369 |
) |
|||||||
Net proceeds from business disposition |
|
- |
|
|
- |
|
|
- |
|
|
807 |
|
|||||||
Net cash (used)/proceeds from corporate-owned life insurance policies |
|
(2 |
) |
|
12 |
|
|
2 |
|
|
110 |
|
|||||||
Finance receivables repaid |
|
28 |
|
|
2 |
|
|
48 |
|
|
27 |
|
|||||||
Net cash used in acquisitions |
|
(2 |
) |
|
(20 |
) |
|
(2 |
) |
|
(23 |
) |
|||||||
Other investing activities, net |
|
16 |
|
|
28 |
|
|
25 |
|
|
68 |
|
|||||||
Net cash from investing activities |
|
(83 |
) |
|
(114 |
) |
|
(266 |
) |
|
620 |
|
|||||||
Cash flows from financing activities: | |||||||||||||||||||
Decrease in short-term debt |
|
(118 |
) |
|
- |
|
|
- |
|
|
- |
|
|||||||
Net proceeds from long-term debt |
|
4 |
|
|
- |
|
|
301 |
|
|
- |
|
|||||||
Principal payments on long-term debt and nonrecourse debt |
|
(261 |
) |
|
(71 |
) |
|
(303 |
) |
|
(131 |
) |
|||||||
Purchases of Textron common stock |
|
(33 |
) |
|
(400 |
) |
|
(503 |
) |
|
(1,783 |
) |
|||||||
Other financing activities, net |
|
(6 |
) |
|
(3 |
) |
|
3 |
|
|
50 |
|
|||||||
Net cash from financing activities |
|
(414 |
) |
|
(474 |
) |
|
(502 |
) |
|
(1,864 |
) |
|||||||
Total cash flows from continuing operations |
|
294 |
|
|
(176 |
) |
|
248 |
|
|
(135 |
) |
|||||||
Total cash flows from discontinued operations |
|
- |
|
|
(1 |
) |
|
(2 |
) |
|
(2 |
) |
|||||||
Effect of exchange rate changes on cash and equivalents |
|
10 |
|
|
(9 |
) |
|
4 |
|
|
(18 |
) |
|||||||
Net change in cash and equivalents |
|
304 |
|
|
(186 |
) |
|
250 |
|
|
(155 |
) |
|||||||
Cash and equivalents at beginning of period |
|
1,053 |
|
|
1,293 |
|
|
1,107 |
|
|
1,262 |
|
|||||||
Cash and equivalents at end of period | $ |
1,357 |
|
$ |
1,107 |
|
$ |
1,357 |
|
$ |
1,107 |
|
|||||||
TEXTRON INC. | |||||||||||||||
Non-GAAP Financial Measures | |||||||||||||||
(Dollars in millions, except per share amounts) | |||||||||||||||
We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures. These non-GAAP financial measures exclude certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures may be useful for period-over-period comparisons of underlying business trends and our ongoing business performance, however, they should be used in conjunction with GAAP measures. Our non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define similarly named measures differently. We encourage investors to review our financial statements and publicly-filed reports in the entirety and not to rely on any single financial measure. We utilize the following definition for the non-GAAP financial measure included in this release: | |||||||||||||||
Adjusted net income and adjusted diluted earnings per share | |||||||||||||||
Adjusted net income and adjusted diluted earnings per share both exclude Special charges, net of taxes, Gain on business disposition, net of taxes, and the income tax benefit resulting from the Tax Cuts and Jobs Act (the "Tax Act"). We consider items recorded in Special charges such as enterprise-wide restructuring and acquisition-related restructuring, integration and transaction costs, to be of a non-recurring nature that is not indicative of ongoing operations. The Gain on business disposition is not considered indicative of ongoing operations as it is a significant one-time transaction related to the sale of our Tools and Test product line. In addition, the impact from the Tax Act is not considered to be indicative of ongoing operations since it represents a one-time adjustment related to a significant tax reform of a non-recurring nature. | |||||||||||||||
Manufacturing cash flow before pension contributions | |||||||||||||||
Manufacturing cash flow before pension contributions adjusts net cash from operating activities (GAAP) for the following: | |||||||||||||||
|
|||||||||||||||
While we believe this measure provides a focus on cash generated from manufacturing operations, before pension contributions, and may be used as an additional relevant measure of liquidity, it does not necessarily provide the amount available for discretionary expenditures since we have certain non-discretionary obligations that are not deducted from the measure. |
Net Income and Diluted Earnings Per Share (EPS) GAAP to Non-GAAP Reconciliation: | ||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
January 4,
2020 |
December 29,
2018 |
January 4,
2020 |
December 29,
2018 |
|||||||||||||||||||||||
Net Income - GAAP | $ |
199 |
|
$ |
246 |
|
$ |
815 |
|
$ |
1,222 |
|
||||||||||||||
Special charges, net of income taxes of $17 million for each period |
|
55 |
|
|
56 |
|
|
55 |
|
|
56 |
|
||||||||||||||
Gain on business disposition, net of income tax expense (benefit) | ||||||||||||||||||||||||||
of $(9) million and $25 million, respectively |
|
- |
|
|
(9 |
) |
|
- |
|
|
(419 |
) |
||||||||||||||
Income tax benefit resulting from the Tax Cuts and Jobs Act |
|
- |
|
|
(14 |
) |
|
- |
|
|
(14 |
) |
||||||||||||||
Adjusted Net Income - Non-GAAP | $ |
254 |
|
$ |
279 |
|
$ |
870 |
|
$ |
845 |
|
||||||||||||||
Earnings per share: | ||||||||||||||||||||||||||
Net Income - GAAP | $ |
0.87 |
|
$ |
1.02 |
|
$ |
3.50 |
|
$ |
4.83 |
|
||||||||||||||
Special charges, net of income taxes |
|
0.24 |
|
|
0.23 |
|
|
0.24 |
|
|
0.22 |
|
||||||||||||||
Gain on business disposition, net of income taxes |
|
- |
|
|
(0.04 |
) |
|
- |
|
|
(1.65 |
) |
||||||||||||||
Income tax benefit resulting from the Tax Cuts and Jobs Act |
|
- |
|
|
(0.06 |
) |
|
- |
|
|
(0.06 |
) |
||||||||||||||
Adjusted Net Income - Non-GAAP | $ |
1.11 |
|
$ |
1.15 |
|
$ |
3.74 |
|
$ |
3.34 |
|
||||||||||||||
Manufacturing Cash Flow Before Pension Contributions GAAP to Non-GAAP Reconciliation and 2020 Outlook: | ||||||||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
January 4,
2020 |
December 29,
2018 |
January 4,
2020 |
December 29,
2018 |
|||||||||||||||||||||||
Net cash from operating activities of continuing operations - GAAP | $ |
755 |
|
$ |
393 |
|
$ |
960 |
|
$ |
1,127 |
|
||||||||||||||
Less: | Capital expenditures |
|
(123 |
) |
|
(136 |
) |
|
(339 |
) |
|
(369 |
) |
|||||||||||||
Dividends received from TFC |
|
- |
|
|
- |
|
|
(50 |
) |
|
(50 |
) |
||||||||||||||
Plus: | Total pension contributions |
|
15 |
|
|
15 |
|
|
51 |
|
|
52 |
|
|||||||||||||
Taxes paid on gain on business disposition |
|
- |
|
|
10 |
|
|
11 |
|
|
10 |
|
||||||||||||||
Proceeds from the sale of property, plant and equipment |
|
3 |
|
|
2 |
|
|
9 |
|
|
14 |
|
||||||||||||||
Manufacturing cash flow before pension contributions - Non-GAAP | $ |
650 |
|
$ |
284 |
|
$ |
642 |
|
$ |
784 |
|
||||||||||||||
2020 Outlook | ||||||||||||||||||||||||||
Net cash from operating activities of continuing operations - GAAP | $ |
1,010 |
|
- |
$ |
1,110 |
|
|||||||||||||||||||
Less: | Capital expenditures | (360) |
||||||||||||||||||||||||
Plus: | Total pension contributions | 50 |
||||||||||||||||||||||||
Manufacturing cash flow before pension contributions - Non-GAAP | $ |
700 |
|
- |
$ |
800 |
|