[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the quarterly period ended September 27, 2008
|
OR
|
|
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
05-0315468
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
|
40
Westminster Street, Providence, RI
|
02903
|
|
(Address
of principal executive offices)
|
(zip
code)
|
Page
|
||
PART
I.
|
FINANCIAL
INFORMATION
|
|
Item
1.
|
Financial
Statements
|
|
3
|
||
4
|
||
5
|
||
7
|
||
Item
1A.
|
16
|
|
Item
2.
|
22
|
|
Item
3.
|
34
|
|
Item
4.
|
35
|
|
PART
II.
|
OTHER
INFORMATION
|
|
Item
2.
|
35
|
|
Item
6.
|
36
|
|
36
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
|||||||||||||
Revenues
|
||||||||||||||||
Manufacturing
|
$ | 3,349 | $ | 2,896 | $ | 10,065 | $ | 8,361 | ||||||||
Finance
|
184 | 214 | 575 | 663 | ||||||||||||
Total
revenues
|
3,533 | 3,110 | 10,640 | 9,024 | ||||||||||||
Costs,
expenses and other
|
||||||||||||||||
Cost
of sales
|
2,641 | 2,275 | 7,940 | 6,617 | ||||||||||||
Selling
and administrative
|
427 | 383 | 1,227 | 1,117 | ||||||||||||
Interest
expense, net
|
102 | 117 | 318 | 364 | ||||||||||||
Provision
for losses on finance receivables
|
34 | 6 | 101 | 22 | ||||||||||||
Total costs, expenses
and other
|
3,204 | 2,781 | 9,586 | 8,120 | ||||||||||||
Income
from continuing operations before income taxes
|
329 | 329 | 1,054 | 904 | ||||||||||||
Income
taxes
|
(119 | ) | (104 | ) | (362 | ) | (272 | ) | ||||||||
Income
from continuing operations
|
210 | 225 | 692 | 632 | ||||||||||||
(Loss)
income from discontinued operations, net of income taxes
|
(4 | ) | 30 | 3 | 29 | |||||||||||
Net
income
|
$ | 206 | $ | 255 | $ | 695 | $ | 661 | ||||||||
Basic
earnings per share
|
||||||||||||||||
Continuing
operations
|
$ | 0.86 | $ | 0.90 | $ | 2.80 | $ | 2.53 | ||||||||
Discontinued
operations
|
(0.01 | ) | 0.12 | 0.02 | 0.12 | |||||||||||
Basic
earnings per share
|
$ | 0.85 | $ | 1.02 | $ | 2.82 | $ | 2.65 | ||||||||
Diluted
earnings per share
|
||||||||||||||||
Continuing
operations
|
$ | 0.85 | $ | 0.88 | $ | 2.75 | $ | 2.48 | ||||||||
Discontinued
operations
|
(0.01 | ) | 0.12 | 0.02 | 0.12 | |||||||||||
Diluted
earnings per share
|
$ | 0.84 | $ | 1.00 | $ | 2.77 | $ | 2.60 | ||||||||
Dividends
per share
|
||||||||||||||||
$2.08
Preferred stock, Series A
|
$ | 0.52 | $ | 0.52 | $ | 1.56 | $ | 1.56 | ||||||||
$1.40
Preferred stock, Series B
|
$ | 0.35 | $ | 0.35 | $ | 1.05 | $ | 1.05 | ||||||||
Common
stock
|
$ | 0.23 | $ | 0.23 | $ | 0.69 | $ | 0.62 |
September
27,
2008
|
December
29,
2007
|
|||||||
Assets
|
||||||||
Manufacturing
group
|
||||||||
Cash
and cash equivalents
|
$ | 221 | $ | 471 | ||||
Accounts
receivable, less allowance for doubtful accounts of $22 and
$29
|
1,045 | 958 | ||||||
Inventories
|
3,276 | 2,593 | ||||||
Other
current assets
|
427 | 540 | ||||||
Assets
of discontinued operations
|
624 | 607 | ||||||
Total current assets
|
5,593 | 5,169 | ||||||
Property,
plant and equipment, less accumulated
depreciation and amortization of $2,449 and
$2,245
|
1,979 | 1,918 | ||||||
Goodwill
|
1,869 | 1,916 | ||||||
Other
assets
|
1,583 | 1,605 | ||||||
Total Manufacturing group
assets
|
11,024 | 10,608 | ||||||
Finance
group
|
||||||||
Cash
|
136 | 60 | ||||||
Finance
receivables, less allowance for losses of $137 and $89
|
8,437 | 8,514 | ||||||
Goodwill
|
169 | 169 | ||||||
Other
assets
|
920 | 640 | ||||||
Total Finance group assets
|
9,662 | 9,383 | ||||||
Total assets
|
$ | 20,686 | $ | 19,991 | ||||
Liabilities
and shareholders’ equity
|
||||||||
Liabilities
|
||||||||
Manufacturing
group
|
||||||||
Current
portion of long-term debt and short-term debt
|
$ | 550 | $ | 355 | ||||
Accounts
payable
|
1,062 | 840 | ||||||
Accrued
liabilities
|
2,713 | 2,615 | ||||||
Liabilities
of discontinued operations
|
440 | 467 | ||||||
Total current liabilities
|
4,765 | 4,277 | ||||||
Other
liabilities
|
1,995 | 2,171 | ||||||
Long-term
debt
|
1,739 | 1,791 | ||||||
Total Manufacturing group
liabilities
|
8,499 | 8,239 | ||||||
Finance
group
|
||||||||
Other
liabilities
|
558 | 462 | ||||||
Deferred
income taxes
|
445 | 472 | ||||||
Debt
|
7,645 | 7,311 | ||||||
Total Finance group
liabilities
|
8,648 | 8,245 | ||||||
Total liabilities
|
17,147 | 16,484 | ||||||
Shareholders’
equity
|
||||||||
Capital
stock:
|
||||||||
Preferred stock
|
2 | 2 | ||||||
Common stock
|
32 | 32 | ||||||
Capital
surplus
|
1,254 | 1,193 | ||||||
Retained
earnings
|
3,291 | 2,766 | ||||||
Accumulated
other comprehensive loss
|
(487 | ) | (400 | ) | ||||
4,092 | 3,593 | |||||||
Less
cost of treasury shares
|
553 | 86 | ||||||
Total
shareholders’ equity
|
3,539 | 3,507 | ||||||
Total
liabilities and shareholders’ equity
|
$ | 20,686 | $ | 19,991 | ||||
Common shares
outstanding
(in thousands)
|
240,912 | 250,061 |
See
Notes to the consolidated financial
statements
|
Consolidated
|
||||||||
2008
|
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 695 | $ | 661 | ||||
Less:
Income from discontinued operations
|
3 | 29 | ||||||
Income
from continuing operations
|
692 | 632 | ||||||
Adjustments
to reconcile income from continuing operations to net cash
provided by operating
activities:
|
||||||||
Earnings of Finance
group, net of distributions
|
- | - | ||||||
Depreciation and
amortization
|
295 | 230 | ||||||
Provision for losses
on finance receivables
|
101 | 22 | ||||||
Share-based
compensation
|
39 | 30 | ||||||
Deferred income
taxes
|
(16 | ) | 22 | |||||
Changes in assets and
liabilities excluding those related to acquisitions
and
divestitures:
|
||||||||
Accounts receivable,
net
|
(89 | ) | (96 | ) | ||||
Inventories
|
(792 | ) | (531 | ) | ||||
Other
assets
|
76 | 34 | ||||||
Accounts
payable
|
218 | 168 | ||||||
Accrued and other
liabilities
|
106 | 200 | ||||||
Captive finance
receivables, net
|
(8 | ) | (157 | ) | ||||
Other operating
activities, net
|
28 | 40 | ||||||
Net
cash provided by operating activities of continuing
operations
|
650 | 594 | ||||||
Net
cash (used in) provided by operating activities of discontinued
operations
|
(18 | ) | 10 | |||||
Net
cash provided by operating activities
|
632 | 604 | ||||||
Cash
flows from investing activities:
|
||||||||
Finance
receivables:
|
||||||||
Originated or
purchased
|
(8,766 | ) | (8,915 | ) | ||||
Repaid
|
8,000 | 8,491 | ||||||
Proceeds on
receivables sales and securitization sales
|
633 | 791 | ||||||
Net
cash used in acquisitions
|
(109 | ) | - | |||||
Capital
expenditures
|
(320 | ) | (219 | ) | ||||
Proceeds
from sale of property, plant and equipment
|
4 | 5 | ||||||
Purchase
of other marketable securities
|
(100 | ) | - | |||||
Other
investing activities, net
|
30 | 17 | ||||||
Net
cash (used in) provided by investing activities of continuing
operations
|
(628 | ) | 170 | |||||
Net
cash (used in) provided by investing activities of discontinued
operations
|
(8 | ) | 55 | |||||
Net
cash (used in) provided by investing activities
|
(636 | ) | 225 | |||||
Cash
flows from financing activities:
|
||||||||
Increase
(decrease) in short-term debt
|
270 | (691 | ) | |||||
Proceeds
from issuance of long-term debt
|
1,461 | 1,430 | ||||||
Principal
payments and retirements of long-term debt
|
(1,245 | ) | (1,121 | ) | ||||
Proceeds
from options exercises
|
40 | 81 | ||||||
Purchases
of Textron common stock
|
(533 | ) | (304 | ) | ||||
Dividends
paid
|
(172 | ) | (97 | ) | ||||
Excess
tax benefits related to stock option exercises
|
10 | 16 | ||||||
Net
cash used in financing activities
|
(169 | ) | (686 | ) | ||||
Net
cash used in financing activities of discontinued
operations
|
(2 | ) | (1 | ) | ||||
Net
cash used in financing activities
|
(171 | ) | (687 | ) | ||||
Effect
of exchange rate changes on cash and cash equivalents
|
1 | 20 | ||||||
Net
(decrease) increase in cash and cash equivalents
|
(174 | ) | 162 | |||||
Cash
and cash equivalents at beginning of period
|
531 | 780 | ||||||
Cash
and cash equivalents at end of period
|
$ | 357 | $ | 942 |
Manufacturing
Group*
|
Finance
Group*
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Cash
flows from operating activities:
|
||||||||||||||||
Net
income
|
$ | 695 | $ | 661 | $ | 49 | $ | 108 | ||||||||
Less:
Income from discontinued operations
|
3 | 29 | - | - | ||||||||||||
Income
from continuing operations
|
692 | 632 | 49 | 108 | ||||||||||||
Adjustments
to reconcile income from continuing operations to net cash
provided by operating
activities:
|
||||||||||||||||
Earnings of Finance
group, net of distributions
|
93 | 27 | - | - | ||||||||||||
Depreciation and
amortization
|
264 | 200 | 31 | 30 | ||||||||||||
Provision for losses
on finance receivables
|
- | - | 101 | 22 | ||||||||||||
Share-based
compensation
|
39 | 30 | - | - | ||||||||||||
Deferred income
taxes
|
11 | 6 | (27 | ) | 16 | |||||||||||
Changes in assets and
liabilities excluding those related to acquisitions
and
divestitures:
|
||||||||||||||||
Accounts receivable,
net
|
(89 | ) | (96 | ) | - | - | ||||||||||
Inventories
|
(778 | ) | (522 | ) | - | - | ||||||||||
Other
assets
|
57 | 5 | 11 | 22 | ||||||||||||
Accounts
payable
|
218 | 168 | - | - | ||||||||||||
Accrued and other
liabilities
|
112 | 157 | (6 | ) | 43 | |||||||||||
Captive finance
receivables, net
|
- | - | - | - | ||||||||||||
Other operating
activities, net
|
33 | 42 | (5 | ) | (2 | ) | ||||||||||
Net
cash provided by operating activities of continuing
operations
|
652 | 649 | 154 | 239 | ||||||||||||
Net
cash (used in) provided by operating activities of discontinued
operations
|
(18 | ) | 10 | - | - | |||||||||||
Net
cash provided by operating activities
|
634 | 659 | 154 | 239 | ||||||||||||
Cash
flows from investing activities:
|
||||||||||||||||
Finance
receivables:
|
||||||||||||||||
Originated or
purchased
|
- | - | (9,489 | ) | (9,690 | ) | ||||||||||
Repaid
|
- | - | 8,602 | 9,070 | ||||||||||||
Proceeds on
receivables sales and securitization sales
|
- | - | 746 | 830 | ||||||||||||
Net
cash used in acquisitions
|
(109 | ) | - | - | - | |||||||||||
Capital
expenditures
|
(312 | ) | (212 | ) | (8 | ) | (7 | ) | ||||||||
Proceeds
on sale of property, plant and equipment
|
4 | 5 | - | - | ||||||||||||
Purchase
of other marketable securities
|
- | - | (100 | ) | - | |||||||||||
Other
investing activities, net
|
- | (3 | ) | 24 | 18 | |||||||||||
Net
cash (used in) provided by investing activities of continuing
operations
|
(417 | ) | (210 | ) | (225 | ) | 221 | |||||||||
Net
cash (used in) provided by investing activities of discontinued
operations
|
(8 | ) | 55 | - | - | |||||||||||
Net
cash (used in) provided by investing activities
|
(425 | ) | (155 | ) | (225 | ) | 221 | |||||||||
Cash
flows from financing activities:
|
||||||||||||||||
Increase
(decrease) in short-term debt
|
240 | (36 | ) | 30 | (655 | ) | ||||||||||
Proceeds
from issuance of long-term debt
|
- | 1 | 1,461 | 1,429 | ||||||||||||
Principal
payments and retirements of long-term debt
|
(44 | ) | (13 | ) | (1,201 | ) | (1,108 | ) | ||||||||
Proceeds
from option exercises
|
40 | 81 | - | - | ||||||||||||
Purchases
of Textron common stock
|
(533 | ) | (304 | ) | - | - | ||||||||||
Dividends
paid
|
(172 | ) | (97 | ) | (142 | ) | (135 | ) | ||||||||
Excess
tax benefits related to stock option exercises
|
10 | 16 | - | - | ||||||||||||
Net
cash (used in) provided by financing activities of continuing
operations
|
(459 | ) | (352 | ) | 148 | (469 | ) | |||||||||
Net
cash (used in) financing activities of discontinued
operations
|
(2 | ) | (1 | ) | - | - | ||||||||||
Net
cash (used in) provided by financing activities
|
(461 | ) | (353 | ) | 148 | (469 | ) | |||||||||
Effect
of exchange rate changes on cash and cash equivalents
|
2 | 17 | (1 | ) | 3 | |||||||||||
Net
increase (decrease) in cash and cash equivalents
|
(250 | ) | 168 | 76 | (6 | ) | ||||||||||
Cash
and cash equivalents at beginning of period
|
471 | 733 | 60 | 47 | ||||||||||||
Cash
and cash equivalents at end of period
|
$ | 221 | $ | 901 | $ | 136 | $ | 41 |
See Notes to the consolidated financial statements. |
6.
|
(In
millions)
|
September
27,
2008
|
December
29,
2007
|
||||||
Accounts
receivable, net
|
$ | 127 | $ | 125 | ||||
Inventories
|
139 | 131 | ||||||
Other
current assets
|
18 | 20 | ||||||
Property,
plant and equipment, net
|
77 | 81 | ||||||
Goodwill
|
211 | 216 | ||||||
Other
assets
|
22 | 26 | ||||||
Total
assets of discontinued operations of Fluid & Power
|
594 | 599 | ||||||
Assets
of discontinued operations of Fastening Systems
|
30 | 8 | ||||||
Total
assets of discontinued operations
|
$ | 624 | $ | 607 | ||||
Accounts
payable and accrued liabilities
|
116 | 178 | ||||||
Accrued
postretirement benefits other than pensions
|
38 | 38 | ||||||
Other
liabilities
|
150 | 115 | ||||||
Long-term
debt
|
- | 2 | ||||||
Total
liabilities of discontinued operations of Fluid &
Power
|
304 | 333 | ||||||
Liabilities
of discontinued operations of Fastening Systems
|
136 | 134 | ||||||
Total
liabilities of discontinued operations
|
$ | 440 | $ | 467 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
||||||||||||
Revenue
|
$ | 174 | $ | 153 | $ | 504 | $ | 438 | ||||||||
Income
from discontinued operations of Fluid & Power,
before
income taxes
|
17 | 24 | 36 | 30 | ||||||||||||
Income
taxes
|
7 | 7 | 11 | 7 | ||||||||||||
Income
from discontinued operations of Fluid & Power,
net of
income taxes
|
10 | 17 | 25 | 23 | ||||||||||||
Transaction-related
costs for Fluid & Power disposal
|
(8 | ) | - | (8 | ) | - | ||||||||||
(Loss)
income from other discontinued operations
|
(6 | ) | 13 | (14 | ) | 6 | ||||||||||
Income
from discontinued operations, net of income taxes
|
$ | (4 | ) | $ | 30 | $ | 3 | $ | 29 |
(In
millions)
|
September
27,
2008
|
December
29,
2007
|
||||||
Finished
goods
|
$ | 968 | $ | 728 | ||||
Work
in process
|
2,056 | 1,819 | ||||||
Raw
materials
|
781 | 588 | ||||||
3,805 | 3,135 | |||||||
Less
progress/milestone payments
|
(529 | ) | (542 | ) | ||||
$ | 3,276 | $ | 2,593 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
September
27, 2008
|
September
29,
2007
|
September
27, 2008
|
September
29,
2007
|
||||||||||||
Net
income
|
$ | 206 | $ | 255 | $ | 695 | $ | 661 | ||||||||
Other
comprehensive income:
|
||||||||||||||||
Recognition of prior service
cost and unrealized losses on pension and postretirement
benefits
|
8 | 15 | 28 | 44 | ||||||||||||
Net deferred (loss) gain on
hedge contracts
|
(27 | ) | 13 | (44 | ) | 35 | ||||||||||
Foreign currency translation
and other
|
(66 | ) | 25 | (71 | ) | 54 | ||||||||||
Comprehensive
income
|
$ | 121 | $ | 308 | $ | 608 | $ | 794 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
thousands)
|
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
||||||||||||
Basic
weighted-average shares outstanding
|
243,083 | 249,332 | 246,915 | 249,779 | ||||||||||||
Dilutive
effect of convertible preferred shares,
stock options and restricted
stock units
|
3,441 | 4,989 | 4,401 | 4,818 | ||||||||||||
Diluted
weighted-average shares outstanding
|
246,524 | 254,321 | 251,316 | 254,597 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
||||||||||||
Compensation
expense
|
$ | (23 | ) | $ | 42 | $ | (45 | ) | $ | 99 | ||||||
Hedge
expense (income) on forward contracts
|
27 | (16 | ) | 72 | (32 | ) | ||||||||||
Income
tax expense (benefit)
|
9 | (14 | ) | 17 | (33 | ) | ||||||||||
Total
net compensation cost included in net income
|
$ | 13 | $ | 12 | $ | 44 | $ | 34 |
Number
of
Options
(In
thousands)
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Life
(In
years)
|
Aggregate
Intrinsic
Value
(In
millions)
|
|||||||||||||
Outstanding
at beginning of period
|
9,024 | $ | 35.37 | 6.3 | $ | 316 | ||||||||||
Granted
|
1,690 | 53.48 | ||||||||||||||
Exercised
|
(1,145 | ) | 34.29 | |||||||||||||
Canceled,
expired or forfeited
|
(148 | ) | 45.12 | |||||||||||||
Outstanding
at end of period
|
9,421 | $ | 38.60 | 6.5 | $ | 26 | ||||||||||
Exercisable
at end of period
|
6,048 | $ | 32.64 | 5.3 | $ | 26 |
Pension
Benefits
|
Postretirement
Benefits
Other
Than Pensions
|
|||||||||||||||
(In
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Service
cost
|
$ | 35 | $ | 31 | $ | 2 | $ | 3 | ||||||||
Interest
cost
|
75 | 67 | 11 | 10 | ||||||||||||
Expected
return on plan assets
|
(101 | ) | (91 | ) | - | - | ||||||||||
Amortization
of prior service cost (credit)
|
5 | 4 | (1 | ) | (2 | ) | ||||||||||
Amortization
of net loss
|
5 | 10 | 4 | 5 | ||||||||||||
Net
periodic benefit cost
|
$ | 19 | $ | 21 | $ | 16 | $ | 16 |
Pension
Benefits
|
Postretirement
Benefits
Other
Than Pensions
|
|||||||||||||||
(In
millions)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Service
cost
|
$ | 106 | $ | 95 | $ | 7 | $ | 7 | ||||||||
Interest
cost
|
227 | 202 | 32 | 31 | ||||||||||||
Expected
return on plan assets
|
(304 | ) | (275 | ) | - | - | ||||||||||
Amortization
of prior service cost (credit)
|
15 | 13 | (4 | ) | (4 | ) | ||||||||||
Amortization
of net loss
|
14 | 30 | 12 | 16 | ||||||||||||
Net
periodic benefit cost
|
$ | 58 | $ | 65 | $ | 47 | $ | 50 |
Nine
Months Ended
|
||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
||||||
Accrual
at the beginning of period
|
$ | 315 | $ | 310 | ||||
Provision
|
146 | 138 | ||||||
Settlements
|
(150 | ) | (134 | ) | ||||
Adjustments
to prior accrual estimates
|
(12 | ) | (6 | ) | ||||
Reclassification
adjustments
|
(5 | ) | - | |||||
Accrual
at the end of period
|
$ | 294 | $ | 308 |
(In
millions)
|
Total
|
Quoted
Prices in Active Markets for Identical Assets or Liabilities
(Level
1)
|
Significant
Other Observable Inputs
(Level
2)
|
Significant
Unobservable
Inputs
(Level
3)
|
||||||||||||
Assets
|
||||||||||||||||
Manufacturing
group
|
||||||||||||||||
Foreign exchange rate
forwardcontracts, net
|
$ | 10 | $ | - | $ | 10 | $ | - | ||||||||
Total Manufacturing
group
|
10 | - | 10 | - | ||||||||||||
Finance group
|
||||||||||||||||
Interest-only
strips
|
48 | - | - | 48 | ||||||||||||
Derivative financial
instruments, net
|
27 | - | 27 | - | ||||||||||||
Total Finance
group
|
75 | - | 27 | 48 | ||||||||||||
Total assets
|
$ | 85 | $ | - | $ | 37 | $ | 48 | ||||||||
Liabilities
|
||||||||||||||||
Manufacturing
group
|
||||||||||||||||
Cash settlement forward
contract
|
$ | 68 | $ | 68 | $ | - | $ | - | ||||||||
Total Manufacturing
group
|
68 | 68 | - | - | ||||||||||||
Total
liabilities
|
$ | 68 | $ | 68 | $ | - | $ | - |
(In
millions)
|
Three
Months Ended
September
27,
2008
|
Nine
Months Ended
September
27,
2008
|
||||||
Balance,
beginning of period
|
$ | 53 | $ | 43 | ||||
Net
gains for the period:
|
||||||||
Securitization gains on sale of
finance receivables
|
17 | 59 | ||||||
Change in value recognized in
Finance revenues
|
1 | 2 | ||||||
Impairment
charge
|
(5 | ) | (5 | ) | ||||
Collections
|
(18 | ) | (51 | ) | ||||
Balance,
end of period
|
$ | 48 | $ | 48 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
||||||||||||
REVENUES
|
||||||||||||||||
MANUFACTURING:
|
||||||||||||||||
Cessna
|
$ | 1,418 | $ | 1,268 | $ | 4,165 | $ | 3,439 | ||||||||
Bell
|
702 | 650 | 1,974 | 1,826 | ||||||||||||
Defense &
Intelligence
|
503 | 326 | 1,606 | 1,004 | ||||||||||||
Industrial
|
726 | 652 | 2,320 | 2,092 | ||||||||||||
3,349 | 2,896 | 10,065 | 8,361 | |||||||||||||
FINANCE
|
184 | 214 | 575 | 663 | ||||||||||||
Total
revenues
|
3,533 | 3,110 | 10,640 | 9,024 | ||||||||||||
SEGMENT
OPERATING PROFIT
|
||||||||||||||||
MANUFACTURING:
|
||||||||||||||||
Cessna
|
$ | 238 | $ | 222 | $ | 707 | $ | 577 | ||||||||
Bell
|
63 | 58 | 184 | 90 | ||||||||||||
Defense &
Intelligence
|
74 | 43 | 212 | 161 | ||||||||||||
Industrial
|
6 | 23 | 91 | 138 | ||||||||||||
381 | 346 | 1,194 | 966 | |||||||||||||
FINANCE
|
18 | 54 | 73 | 174 | ||||||||||||
Segment
profit
|
399 | 400 | 1,267 | 1,140 | ||||||||||||
Corporate
expenses and other, net
|
(38 | ) | (52 | ) | (122 | ) | (170 | ) | ||||||||
Interest
expense, net
|
(32 | ) | (19 | ) | (91 | ) | (66 | ) | ||||||||
Income
from continuing operations before
income taxes
|
$ | 329 | $ | 329 | $ | 1,054 | $ | 904 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
|||||||||||||
Federal
statutory income tax rate
|
35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | ||||||||
Increase
(decrease) in taxes resulting from:
|
||||||||||||||||
State income
taxes
|
3.2 | 0.8 | 1.8 | 1.1 | ||||||||||||
Foreign tax rate
differential
|
(2.5 | ) | 0.6 | (4.4 | ) | (0.3 | ) | |||||||||
Manufacturing
deduction
|
(1.6 | ) | (1.6 | ) | (1.6 | ) | (1.6 | ) | ||||||||
Equity hedge expense
(income)
|
2.9 | (1.5 | ) | 2.4 | (1.2 | ) | ||||||||||
Interest on tax
contingencies
|
0.1 | 1.1 | 1.6 | 1.1 | ||||||||||||
Favorable tax
settlements
|
- | - | - | (1.0 | ) | |||||||||||
Other, net
|
(0.9 | ) | (2.8 | ) | (0.5 | ) | (3.0 | ) | ||||||||
Effective
income tax rate
|
36.2 | % | 31.6 | % | 34.3 | % | 30.1 | % |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
||||||||||||
Revenue
|
$ | 174 | $ | 153 | $ | 504 | $ | 438 | ||||||||
Income
from discontinued operations of Fluid & Power, before
income
taxes
|
17 | 24 | 36 | 30 | ||||||||||||
Income
taxes
|
7 | 7 | 11 | 7 | ||||||||||||
Income
from discontinued operations of Fluid & Power, net of
income
taxes
|
10 | 17 | 25 | 23 | ||||||||||||
Transaction-related
costs for Fluid & Power disposal
|
(8 | ) | - | (8 | ) | - | ||||||||||
(Loss)
income from other discontinued operations
|
(6 | ) | 13 | (14 | ) | 6 | ||||||||||
Income
from discontinued operations, net of income taxes
|
$ | (4 | ) | $ | 30 | $ | 3 | $ | 29 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
||||||||||||
Revenues
|
$ | 1,418 | $ | 1,268 | $ | 4,165 | $ | 3,439 | ||||||||
Segment
profit
|
$ | 238 | $ | 222 | $ | 707 | $ | 577 |
Bell
|
||||||||||||||||
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
||||||||||||
Revenues
|
$ | 702 | $ | 650 | $ | 1,974 | $ | 1,826 | ||||||||
Segment
profit
|
$ | 63 | $ | 58 | $ | 184 | $ | 90 |
Defense
& Intelligence
|
||||||||||||||||
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
||||||||||||
Revenues
|
$ | 503 | $ | 326 | $ | 1,606 | $ | 1,004 | ||||||||
Segment
profit
|
$ | 74 | $ | 43 | $ | 212 | $ | 161 |
Industrial
|
||||||||||||||||
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
||||||||||||
Revenues
|
$ | 726 | $ | 652 | $ | 2,320 | $ | 2,092 | ||||||||
Segment
profit
|
$ | 6 | $ | 23 | $ | 91 | $ | 138 |
Finance
|
||||||||||||||||
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
||||||||||||
Revenues
|
$ | 184 | $ | 214 | $ | 575 | $ | 663 | ||||||||
Segment
profit
|
$ | 18 | $ | 54 | $ | 73 | $ | 174 |
(In
millions)
|
Quarter
|
Year
-
To
-
Date
|
||||||
Lower market interest
rates
|
$ | (42 | ) | $ | (111 | ) | ||
Benefit from higher
volume
|
10 | 17 | ||||||
Benefit from variable-rate
receivable interest rate floors
|
6 | 12 | ||||||
Gains on the sale of leveraged
lease investment
|
- | (16 | ) | |||||
Leveraged lease residual value
impairments
|
- | 8 |
(In
millions)
|
Quarter
|
Year
-
To
-
Date
|
||||||
Increase in the provision for
loan losses
|
$ | (28 | ) | $ | (79 | ) | ||
Higher borrowing costs
relative to market rates
|
(7 | ) | (26 | ) | ||||
Benefit from variable-rate
receivable interest rate floors
|
6 | 12 | ||||||
Gains on the sale of leveraged
lease investment
|
- | (16 | ) | |||||
Leveraged lease residual value
impairments
|
- | 8 |
(Dollars
in millions)
|
September
27,
2008
|
December
29,
2007
|
||||||
Nonperforming
assets
|
$ | 250 | $ | 123 | ||||
Nonaccrual
finance receivables
|
$ | 189 | $ | 79 | ||||
Allowance
for losses
|
$ | 137 | $ | 89 | ||||
Ratio
of allowance for losses to finance receivables
|
1.60 | % | 1.03 | % | ||||
Ratio
of nonperforming assets to total finance assets
|
2.67 | % | 1.34 | % | ||||
Ratio
of allowance for losses to nonaccrual finance receivables
|
72.7 | % | 111.7 | % | ||||
60+
days contractual delinquency as a percentage of finance
receivables
|
1.06 | % | 0.43 | % |
(In
millions)
|
Facility
Amount
|
Commercial
Paper
Outstanding
|
Letters
of
Credit
Outstanding
|
Amount
Not Reserved as Support for Commercial Paper and Letters of
Credit
|
||||||||||||
Manufacturing
group — multi-year facility expiring in 2012*
|
$ | 1,250 | $ | 227 | $ | 21 | $ | 1,002 | ||||||||
Finance
group — multi-year facility expiring in 2012
|
1,750 | 1,445 | 10 | 295 | ||||||||||||
Total
|
$ | 3,000 | $ | 1,672 | $ | 31 | $ | 1,297 |
Fitch
Ratings
|
Moody’s
|
Standard
& Poor’s
|
||||||||||
Long-term
ratings:
|
||||||||||||
Manufacturing
|
A- | A3 | A- | |||||||||
Finance
|
A- | A3 | A- | |||||||||
Short-term
ratings:
|
||||||||||||
Manufacturing
|
F2 | P2 | A2 | |||||||||
Finance
|
F2 | P2 | A2 | |||||||||
Outlook
|
Negative
|
Negative
|
Watch
(Negative)
|
Payments
/ Receipts Due by Period
|
||||||||||||||||||||||||||||
(In
millions)
|
Less
than 1 year
|
1-2
Years
|
2-3
Years
|
3-4
Years
|
4-5
Years
|
More
than 5 years
|
Total
|
|||||||||||||||||||||
Payments
due:
(1)
|
||||||||||||||||||||||||||||
Multi-year
credit facilities and commercial paper
(2)
|
$ | — | $ | — | $ | — | $ | 1,445 | $ | — | $ | — | $ | 1,445 | ||||||||||||||
Other
short-term debt
|
36 | — | — | — | — | — | 36 | |||||||||||||||||||||
Term
debt
|
1,239 | 2,567 | 1,229 | 53 | 578 | 472 | 6,138 | |||||||||||||||||||||
Off-balance
sheet debt
|
2,113 | 77 | 77 | 111 | 79 | 211 | 2,668 | |||||||||||||||||||||
Total
payments due
|
3,388 | 2,644 | 1,306 | 1,609 | 657 | 683 | 10,287 | |||||||||||||||||||||
Cash
and contractual receipts:
(1)(3)
|
||||||||||||||||||||||||||||
Finance
receivable receipts
|
2,570 | 1,571 | 1,118 | 830 | 695 | 1,790 | 8,574 | |||||||||||||||||||||
Off-balance
sheet finance receivable receipts
|
2,294 | 77 | 77 | 111 | 79 | 231 | 2,869 | |||||||||||||||||||||
Total
contractual receipts
|
4,864 | 1,648 | 1,195 | 941 | 774 | 2,021 | 11,443 | |||||||||||||||||||||
Cash
|
136 | — | — | — | — | — | 136 | |||||||||||||||||||||
Total
cash and contractual receipts
|
5,000 | 1,648 | 1,195 | 941 | 774 | 2,021 | 11,579 | |||||||||||||||||||||
Net
cash and contractual receipts (payments)
|
$ | 1,612 | $ | (996 | ) | $ | (111 | ) | $ | (668 | ) | $ | 117 | $ | 1,338 | $ | 1,292 | |||||||||||
Cumulative
net cash and contractual
receipts
(payments)
|
$ | 1,612 | $ | 616 | $ | 505 | $ | (163 | ) | $ | (46 | ) | $ | 1,292 |
(1)
|
Contractual
receipts and payments exclude finance charges from receivables, debt
interest payments and other items.
|
(2)
|
Commercial
paper outstanding at September 27, 2008 is reflected as being repaid
in connection with the maturity of our $1.75 billion committed multi-year
credit facility in 2012. At September 27, 2008, this facility had
$295 million not reserved as support for commercial paper and letters of
credit. Actual commercial paper issuances generally are
outstanding for less than 90 days and are replaced by new commercial paper
borrowing based on current needs.
|
(3)
|
Finance
receivable receipts are based on contractual cash flows. These
amounts could differ due to prepayments, charge-offs and other factors,
including the inability of borrowers to repay the balance of the loan at
the contractual maturity
date.
|
Nine
Months Ended
|
||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
||||||
Operating
activities
|
$ | 652 | $ | 649 | ||||
Investing
activities
|
$ | (417 | ) | $ | (210 | ) | ||
Financing
activities
|
$ | (459 | ) | $ | (352 | ) |
Nine
Months Ended
|
||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
||||||
Operating
activities
|
$ | 154 | $ | 239 | ||||
Investing
activities
|
$ | (225 | ) | $ | 221 | |||
Financing
activities
|
$ | 148 | $ | (469 | ) |
Nine
Months Ended
|
||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
||||||
Operating
activities
|
$ | 650 | $ | 594 | ||||
Investing
activities
|
$ | (628 | ) | $ | 170 | |||
Financing
activities
|
$ | (169 | ) | $ | (686 | ) |
Nine
Months Ended
|
||||||||
(In
millions)
|
September
27,
2008
|
September
29,
2007
|
||||||
Reclassifications
from investing activities:
|
||||||||
Finance receivable originations
for Manufacturing group inventory sales
|
$ | (723 | ) | $ | (775 | ) | ||
Cash received from customers,
sale of receivables and securitizations
|
715 | 618 | ||||||
Other
|
(6 | ) | (2 | ) | ||||
Total
reclassifications from investing activities
|
(14 | ) | (159 | ) | ||||
Dividends
paid by Finance group to Manufacturing group
|
(142 | ) | (135 | ) | ||||
Total
reclassifications and adjustments to operating activities
|
$ | (156 | ) | $ | (294 | ) |
Item
3.
|
QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
Item
4.
|
Item
2.
|
UNREGISTERED SALES OF
EQUITY SECURITIES AND USE OF
PROCEEDS
|
Issuer
Repurchases of Equity Securities
|
Total
Number
of
Shares
Purchased
|
Average
Price
Paid
per
Share
(Excluding
Commissions)
|
Total
Number of
Shares
Purchased as
Part
of Publicly
Announced
Plan**
|
Maximum
Number
of Shares
that
May Yet Be
Purchased
Under
the Plan**
|
|||||||||||||
Month
1 (June 29, 2008 –
August
2, 2008)
|
6,573,910 | 42.52 | 6,573,910 | 12,643,090 | ||||||||||||
Month
2 (August 3, 2008 –
August
30, 2008)
|
1,240,000 | 41.23 | 1,240,000 | 11,403,090 | ||||||||||||
Month
3 (August 31, 2008 –
September
27, 2008)
|
300,000 | 38.59 | 300,000 | 11,103,090 | ||||||||||||
Total
|
8,113,910 | 42.18 | 8,113,910 |
TEXTRON
INC.
|
|||
Date:
|
October
29, 2008
|
/s/Richard
L. Yates
|
|
Richard
L. Yates
Senior
Vice President and Corporate Controller
(principal
accounting officer)
|
|||
10.1
|
Amendment
No. 1, effective July 23, 2008, to Textron Inc. 2007 Long-Term Incentive
Plan (Amended and Restated as of May 1, 2007)
|
10.2
|
Amendment
No. 1, dated July 23, 2008, to Textron Spillover Pension Plan, As Amended
and Restated Effective January 1, 2008
|
10.3
|
Form
of Aircraft Time Sharing Agreement between Textron Inc. and its executive
officers
|
12.1
|
Computation
of ratio of income to fixed charges of Textron Inc. Manufacturing
Group
|
12.2
|
Computation
of ratio of income to fixed charges of Textron Inc. including all
majority-owned subsidiaries
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
32.1
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
Pursuant
to Section 16 of the Textron Inc. 2007 Long-Term Incentive
Plan
(Amended
and Restated as of May 1, 2007) (the "Plan"), Textron Inc. hereby amends
the
Plan,
effective July 23, 2008, as follows:
|
1.
Section
8(a) of the Plan is hereby amended to add the following
sentence
at
the end of such section:
|
Awards of Restricted
Stock or Restricted Stock Units shall not be deemed to
lack a minimum
period of restriction solely because they vest before the end
of
the period in the
event of the Participant’s death, disability or retirement,
including Early
Retirement, or in the event of a Change of Control.
|
2.
Section
10(a) of the Plan is hereby amended to add the following
sentence
at
the end of such section:
|
Awards of
Performance Stock or Performance Share Units shall not be
deemed
to lack a minimum
period of restriction solely because they vest before the end
of the period in the
event of the Participant’s death, disability or retirement,
including Early
Retirement, or in the event of a Change of
Control.
|
WHEREAS, Textron
Inc. wishes to amend the Textron Spillover Pension Plan to
provide
an
additional pension benefit to certain executives designated by the Chief
Executive Officer;
|
NOW,
THEREFORE, IT IS RESOLVED, that the Textron Spillover Pension Plan
be,
and
it hereby is, amended as follows, effective July 23,
2008:
|
1. Section
3.01 is amended by adding the following sentence to the end of that
section:
|
“In
addition to the benefit described in the preceding sentence, a Participant
who is
designated
pursuant to Appendix C shall be eligible to receive a wrap-around pension
benefit
determined
as provided in Appendix C, subject to the vesting requirements and other
terms and
conditions
specified in Appendix C.”
|
2. A new
Appendix C is added to the Plan in the form attached hereto as
Exhibit
A
.
|
1.
|
Lessor
agrees to lease the Aircraft to Lessee, on as “as needed – as available”
basis, pursuant to the provisions of FAR 91.501(c)(1), and solely at
Lessor’s discretion, including, without limitation, Lessor’s determination
of Aircraft availability. This Agreement will terminate on the
date when Lessee is no longer an employee of Lessor; provided however that
either Party may at any time terminate this Agreement by providing thirty
(30) days prior written notice to the other Party, or sooner if required
by applicable law, regulation or insurance
requirement.
|
2.
|
For
each flight conducted under this Agreement, Lessee shall pay Lessor all or
so much of the actual expenses of that flight as authorized by FAR Part
91.501(d) and as billed to Lessee by Lessor in accordance with Lessor’s
Corporate Aircraft Request Guidelines. The expenses for which
Lessee may be liable are strictly limited to:
|
(a)
|
Fuel,
oil, lubricants, and other
additives;
|
(b)
|
Travel
expenses of the crew, including food, lodging and ground
transportation;
|
(c)
|
Hangar
and tie down costs away from the Aircraft's base of
operation;
|
(d)
|
Insurance
obtained for the specific flight;
|
(e)
|
Landing
fees, airport taxes and similar assessments including, but not limited to,
Section 4261 of the Internal Revenue Code and related excise
taxes;
|
(f)
|
Customs,
foreign permit, and similar fees directly related to the
flight;
|
(g)
|
In-flight
food and beverages;
|
(h)
|
Passenger
ground transportation;
|
(i)
|
Flight
planning and weather contract services;
and
|
(j)
|
An
additional charge equal to 100% of the expenses listed in subparagraph (a)
of this paragraph.
|
3.
|
Lessor
will pay all expenses related to the operation of the Aircraft when
incurred, and will invoice Lessee in accordance with paragraph 2 above as
soon as practicable after any flight for Lessee’s
account. Lessee shall pay Lessor for said expenses within
thirty (30) days of receipt of the
invoice.
|
4.
|
Lessee
will provide Lessor with requests for flight time and proposed flight
schedules as far in advance of any given flight as possible, and in
accordance with Lessor’s Corporate Aircraft Request Guidelines. Lessor
reserves the right to change the Corporate Aircraft Request Guidelines at
any time, and Lessee agrees to comply with all provisions of the
then-current Corporate Aircraft Request Guidelines. In the
event that any provisions of the Corporate Aircraft Request Guidelines
conflict with the lessee’s employment agreement with Textron Inc., the
terms of the employment agreement will take
precedence.
|
5.
|
Lessor
shall have sole and exclusive authority over the scheduling of the
Aircraft, including which Aircraft is used for a particular
flight.
|
6.
|
Lessor
shall be solely responsible for seeking maintenance, preventive
maintenance and required or otherwise necessary inspections on the
Aircraft, and shall take such requirements into account in scheduling the
Aircraft. No period of maintenance, preventative maintenance,
or inspection shall be delayed or postponed for the purpose of scheduling
the Aircraft, unless said maintenance or inspection can be safely
conducted at a later time in compliance with all applicable laws and
regulations, and with the sound discretion of the pilot in
command. The pilot in command shall have final and complete
authority to cancel any flight for any reason or condition which in his
judgment would compromise the safety of the
flight.
|
7.
|
Lessor
represents that the flight operations for the Aircraft as contemplated in
this Agreement will be covered by Lessor’s aircraft all-risk physical
damage insurance (hull coverage), aircraft bodily injury and property
damage liability insurance, passenger, pilot and crew voluntary settlement
insurance and statutory workers compensation and employer’s liability
insurance.
|
8.
|
Lessor
shall contract for or employ, pay for and provide to Lessee a qualified
flight crew for each flight undertaken under this
Agreement.
|
9.
|
In
accordance with applicable FAR, the qualified flight crew provided by
Lessor will exercise all of its duties and responsibilities in regard to
the safety of each flight conducted hereunder. Lessee
specifically agrees that the flight crew, in its sole discretion, may
terminate any flight, refuse to commence any flight, or take other action
which in the considered judgment of the pilot in command is necessitated
by considerations of safety. No such action of the pilot in
command shall create or support any liability for loss, injury, damage or
delay to Lessee or any other
person.
|
10.
|
Lessee
warrants that:
|
(a)
|
Lessee
will use the Aircraft solely for and on account of his own personal use,
and will not use the Aircraft for the purpose of providing transportation
of passengers or cargo for compensation or hire, except as otherwise in
compliance with the requirements of FAR 91.501, and will not accept any
reimbursement from any passenger or otherwise for charges under this
Agreement;
|
(b)
|
Lessee
shall refrain from incurring any mechanic's or other lien in connection
with inspection, preventative maintenance, maintenance or storage of the
Aircraft, whether permissible or impermissible under this Agreement, nor
shall there be any attempt by Lessee to convey, mortgage, assign, lease or
in any way alienate the Aircraft or create any kind of lien or security
interest involving the Aircraft or do anything or take any action that
might mature into such a lien; and
|
(c)
|
During
the term of this Agreement, Lessee will abide by and conform to all such
laws, governmental and airport orders, rules and regulations, as shall
from time to time be in effect relating in any way to the operation and
use of the Aircraft by a timesharing
Lessee.
|
11.
|
Neither
this Agreement nor any Party's interest herein shall be assignable to any
other Party whatsoever. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, their heirs,
representatives and successors.
|
12.
|
Lessor
shall not be liable to Lessee or any of Lessee’s family members or
invitees for damages, including direct, indirect, special, consequential
and/or punitive damages of any kind or nature under any circumstances or
for any reason including any delay or failure to furnish the aircraft or
caused or occasioned by the performance or non-performance of any services
covered by this agreement.
|
13.
|
WITHIN
THE TWELVE (12) MONTH PERIOD PRECEDING THE DATE OF THIS AGREEMENT, THE
AIRCRAFT HAVE BEEN INSPECTED AND MAINTAINED IN ACCORDANCE WITH SECTION
91.409(f)(3) OF THE FAR, AND DURING THE TERM OF THIS AGREEMENT AND FOR
OPERATIONS TO BE CONDUCTED PURSUANT TO THIS AGREEMENT, THE AIRCRAFT WILL
BE INSPECTED AND MAINTAINED IN ACCORDANCE WITH THAT SECTION.
LESSOR
SHALL HAVE AND RETAIN OPERATIONAL CONTROL OF THE AIRCRAFT DURING ALL
OPERATIONS CONDUCTED PURSUANT TO THIS LEASE. EACH PARTY HERETO
CERTIFIES THAT IT UNDERSTANDS THE EXTENT OF ITS RESPONSIBILITIES, SET
FORTH HEREIN, FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION
REGULATIONS.
AN
EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT
FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FEDERAL
AVIATION ADMINISTRATION FLIGHT STANDARDS DISTRICT OFFICE, GENERAL AVIATION
DISTRICT OFFICE, OR AIR CARRIER DISTRICT OFFICE.
LESSOR
AGREES THAT A TRUE COPY OF THIS AGREEMENT SHALL BE CARRIED ON THE AIRCRAFT
AT ALL TIMES, AND SHALL BE MADE AVAILABLE FOR INSPECTION UPON REQUEST BY
AN APPROPRIATELY IDENTIFIED REPRESENTATIVE OF THE ADMINISTRATOR OF THE
FAA.
|
14.
|
The
Parties agree that this Agreement shall be governed by and construed in
accordance with the law of the State of Delaware, without reference to its
conflict of laws principles.
|
15.
|
This
Agreement may be executed in one or more counterparts each of which will
be deemed an original, all of which together shall constitute one and the
same agreement.
|
16.
|
In
the event that any one or more of the provisions of this Agreement shall
for any reason be held illegal, invalid or unenforceable, those provisions
shall be replaced by provisions acceptable to both Parties to this
Agreement.
|
Nine
Months
Ended
September
27, 2008
|
||||
Fixed
charges:
|
||||
Interest
expense
|
$ | 102 | ||
Estimated interest portion of
rents
|
23 | |||
Total fixed
charges
|
$ | 125 | ||
Income:
|
||||
Income from continuing
operations before income taxes
|
$ | 1,054 | ||
Dividends in excess of pretax
income of Textron Finance
|
69 | |||
Fixed charges
|
125 | |||
Adjusted income
|
$ | 1,248 | ||
Ratio
of income to fixed charges
|
9.98 |
Nine
Months
Ended
September
27, 2008
|
||||
Fixed
charges:
|
||||
Interest
expense
|
$ | 329 | ||
Estimated interest portion of
rents
|
26 | |||
Total fixed
charges
|
$ | 355 | ||
Income:
|
||||
Income from continuing
operations before income taxes
|
$ | 1,054 | ||
Fixed charges
|
355 | |||
Adjusted income
|
$ | 1,409 | ||
Ratio
of income to fixed charges
|
3.97 |
1.
|
I
have reviewed this quarterly report on Form 10-Q of Textron
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|
Date:
|
October
29, 2008
|
/s/
Lewis B. Campbell
|
|
Lewis
B. Campbell
Chairman,
President and Chief Executive
Officer
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of Textron
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|
Date:
|
October
29, 2008
|
/s/
Ted R. French
|
|
Ted
R. French
Executive
Vice President and Chief
Financial
Officer
|
(1)
|
The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
Date:
|
October
29, 2008
|
/s/
Lewis B. Campbell
|
|
Lewis
B. Campbell
Chairman, President
and Chief Executive
Officer
|
(1)
|
The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
Date:
|
October
29, 2008
|
/s/
Ted R. French
|
|
Ted
R. French
|
|||
Executive
Vice President and Chief
Financial
Officer
|