UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  July 17, 2019
 
TEXTRON INC.
(Exact name of Registrant as specified in its charter)

Delaware	 	1-5480	 	05-0315468	
(State of	 	(Commission File Number)	 	(IRS Employer	
Incorporation)	 	 	 	Identification Number)	
 
40 Westminster Street, Providence, Rhode Island  02903
(Address of principal executive offices)
 
Registrant’s telephone number, including area code:  (401) 421-2800
 
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	 	Trading Symbol(s) 	 	Name of exchange on which registered	
Common Stock — par value $0.125	 	TXT	 	New York Stock Exchange	
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4(c)) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company  o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    o

 

 
Item 2.02                                            Results of Operations and Financial Condition
 
On July 17, 2019, Textron Inc. (“Textron”) issued a press release announcing its financial results for the fiscal quarter ended June 29, 2019.  This press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
 
A discussion of the reasons why management believes that the presentation of non-GAAP financial measures provides useful information to investors regarding Textron’s financial condition and results of operations is attached to the press release attached hereto as Exhibit 99.1.
 
Item 9.01                                            Financial Statements and Exhibits
 
(d) Exhibits
 
The following exhibit is filed herewith:

Exhibit
Number	 	Description	
 	 	 	
99.1	 	Press release dated July 17, 2019.	
 
2 

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	TEXTRON INC.	
 	(Registrant)	

 	By:	/s/ Mark S. Bamford	
 	 	Mark S. Bamford	
 	 	Vice President and Corporate Controller	
 	 	
Date: July 17, 2019	 	
 
3 

Exhibit 99.1 

	 	 	
 	 	 	
Corporate Communications Department	 	 	
NEWS Release	 	 	
 
Textron Reports Second Quarter 2019 Results; Raises Full-Year EPS Outlook
 
·                   EPS of $0.93, up 7% from a year ago
·                   Operating margin of 10.5%, up from 9.3% a year ago
·                   $159 million returned to shareholders through share repurchases
·                   Full-year EPS guidance raised to $3.65 - $3.85 per share, up $0.10
 
Providence, Rhode Island — July 17, 2019 — Textron Inc. (NYSE: TXT) today reported second quarter 2019 net income of $0.93 per share, compared to $0.87 per share in the second quarter of 2018.
 
“Operationally, we continued to have solid margin performance across our businesses with improvements in the quarter at Aviation and Industrial, and we remain on track for growth in the second half of the year,” said Textron Chairman and CEO Scott C. Donnelly.
 
Cash Flow
 
Net cash provided by operating activities of the manufacturing group for the second quarter totaled $163 million, compared to $468 million in last year’s second quarter. Manufacturing cash flow before pension contributions, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, totaled $102 million compared to $399 million last year.
 
In the quarter, Textron returned $159 million to shareholders through share repurchases.
 
Outlook
 
Textron now expects 2019 earnings per share from continuing operations to be in a range of $3.65 to $3.85, up $0.10 from our previous outlook. Textron reiterated its expectation for cash flow from continuing operations of the manufacturing group before pension contributions of $700 to $800 million with planned pension contributions of about $50 million.
 
Donnelly continued, “We remain on target for a strong 2019 as we continue our focus on execution and earnings growth through the balance of the year.”
 
Second Quarter Segment Results
 
Textron Aviation
 
Revenues at Textron Aviation of $1.1 billion were down $153 million from last year’s second quarter, primarily due to lower volume and mix across the commercial turboprop and defense product lines.
 
Textron Aviation delivered 46 jets, down from 48 last year, and 34 commercial turboprops, down from 47 last year.

 
Segment profit was $105 million in the second quarter, up $1 million from a year ago as favorable performance was offset by the lower volume and mix.
 
Textron Aviation backlog at the end of the second quarter was $1.9 billion.
 
Bell
 
Bell revenues were $771 million, down 7% from last year, primarily on lower military volume.
 
Bell delivered 53 commercial helicopters in the quarter, down from 57 last year.
 
Segment profit of $103 million was down $14 million, primarily due to the lower military volume.
 
Bell backlog at the end of the second quarter was $6.0 billion.
 
Textron Systems
 
Revenues at Textron Systems were $308 million, down from $380 million last year, primarily reflecting lower volume at TRU Simulation + Training and Unmanned Systems.
 
Segment profit was up $9 million from last year’s second quarter, primarily due to favorable performance which included a gain related to the formation of our new training business with FlightSafety International Inc.
 
Textron Systems’ backlog at the end of the second quarter was $1.4 billion.
 
Industrial
 
Industrial revenues of $1.0 billion decreased $213 million, largely related to the impact from the disposition of our Tools & Test product line and lower volume.
 
Segment profit was down $4 million from the second quarter of 2018, largely due to the impact from lower volume and the product line disposition, partially offset by favorable performance primarily related to the Specialized Vehicles product line.
 
Finance
 
Finance segment revenues were down $1 million, and profit was up $1 million from last year’s second quarter.
 
Conference Call Information
 
Textron will host its conference call today, July 17, 2019 at 8:00 a.m. (Eastern) to discuss its results and outlook.  The call will be available via webcast at www.textron.com or by direct dial at (800) 230-1951 in the U.S. or (612) 288-0340 outside of the U.S. (request the Textron Earnings Call).
 
In addition, the call will be recorded and available for playback beginning at 10:30 a.m. (Eastern) on Wednesday, July 17, 2019 by dialing (320) 365-3844; Access Code: 457171.

 
A package containing key data that will be covered on today’s call can be found in the Investor Relations section of the company’s website at www.textron.com.
 
About Textron Inc.
 
Textron Inc. is a multi-industry company that leverages its global network of aircraft, defense, 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, Cessna, Beechcraft, Hawker, Jacobsen, Kautex, Lycoming, E-Z-GO, Arctic Cat, Textron Systems, and TRU Simulation + Training. For more information visit: www.textron.com.
 
# # #
 
Forward-looking Information
 
Certain statements in this release and other oral and written statements made by us from time to time are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which may describe strategies, goals, outlook or other non-historical matters, or project revenues, income, returns or other financial measures, often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “guidance,” “project,” “target,” “potential,” “will,” “should,” “could,” “likely” or “may” and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements.  In addition to those factors described in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q under “Risk Factors”, among the factors that could cause actual results to differ materially from past and projected future results are the following: Interruptions in the U.S. Government’s ability to fund its activities and/or pay its obligations; changing priorities or reductions in the U.S. Government defense budget, including those related to military operations in foreign countries; our ability to perform as anticipated and to control costs under contracts with the U.S. Government; the U.S. Government’s ability to unilaterally modify or terminate its contracts with us for the U.S. Government’s convenience or for our failure to perform, to change applicable procurement and accounting policies, or, under certain circumstances, to withhold payment or suspend or debar us as a contractor eligible to receive future contract awards; changes in foreign military funding priorities or budget constraints and determinations, or changes in government regulations or policies on the export and import of military and commercial products; volatility in the global economy or changes in worldwide political conditions that adversely impact demand for our products; volatility in interest rates or foreign exchange rates; risks related to our international business, including establishing and maintaining facilities in locations around the world and relying on joint venture partners, subcontractors, suppliers, representatives, consultants and other business partners in connection with international business, including in emerging market countries; our Finance segment’s ability to maintain portfolio credit quality or to realize full value of receivables; performance issues with key suppliers or subcontractors; legislative or regulatory actions, both domestic and foreign, impacting our operations or demand for our products; our ability to control costs and successfully implement various cost-reduction activities; the efficacy of research and development investments to develop new products or unanticipated expenses in connection with the launching of significant new products or programs; the timing of our new product launches or certifications of our new aircraft products; our ability to keep pace with our competitors in the introduction of new products and upgrades with features and technologies desired by our customers;

 
pension plan assumptions and future contributions; demand softness or volatility in the markets in which we do business; cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or, operational disruption; difficulty or unanticipated expenses in connection with integrating acquired businesses; the risk that acquisitions do not perform as planned, including, for example, the risk that acquired businesses will not achieve revenue and profit projections; and t he impact of changes in tax legislation.
 
Investor Contacts:
Eric Salander — 401-457-2288
Jeffrey Trivella — 401-457-2288
 
Media Contact:
David Sylvestre — 401-457-2362

 
TEXTRON INC.
Revenues by Segment and Reconciliation of Segment Profit to Net Income
 (Dollars in millions, except per share amounts)
(Unaudited)

 	 	Three Months Ended	 	Six Months Ended	 	
 	 	June 29, 2019	 	June 30, 2018	 	June 29, 2019	 	June 30, 2018	 	
REVENUES	 	 	 	 	 	 	 	 	 	
MANUFACTURING:	 	 	 	 	 	 	 	 	 	
Textron Aviation	 	$	1,123	 	$	1,276	 	$	2,257	 	$	2,286	 	
Bell	 	771	 	831	 	1,510	 	1,583	 	
Textron Systems	 	308	 	380	 	615	 	767	 	
Industrial	 	1,009	 	1,222	 	1,921	 	2,353	 	
 	 	3,211	 	3,709	 	6,303	 	6,989	 	
 	 	 	 	 	 	 	 	 	 	
FINANCE	 	16	 	17	 	33	 	33	 	
Total revenues	 	$	3,227	 	$	3,726	 	$	6,336	 	$	7,022	 	
 	 	 	 	 	 	 	 	 	 	
SEGMENT PROFIT	 	 	 	 	 	 	 	 	 	
MANUFACTURING:	 	 	 	 	 	 	 	 	 	
Textron Aviation	 	$	105	 	$	104	 	$	211	 	$	176	 	
Bell	 	103	 	117	 	207	 	204	 	
Textron Systems	 	49	 	40	 	77	 	90	 	
Industrial	 	76	 	80	 	126	 	144	 	
 	 	333	 	341	 	621	 	614	 	
 	 	 	 	 	 	 	 	 	 	
FINANCE	 	6	 	5	 	12	 	11	 	
Segment Profit	 	339	 	346	 	633	 	625	 	
 	 	 	 	 	 	 	 	 	 	
Corporate expenses and other, net	 	(24	)	(51	)	(71	)	(78	)	
Interest expense, net for Manufacturing group	 	(36	)	(35	)	(71	)	(69	)	
 	 	 	 	 	 	 	 	 	 	
Income before income taxes	 	279	 	260	 	491	 	478	 	
Income tax expense	 	(62	)	(36	)	(95	)	(65	)	
 	 	 	 	 	 	 	 	 	 	
Net income	 	$	217	 	$	224	 	$	396	 	$	413	 	
 	 	 	 	 	 	 	 	 	 	
Earnings per share:	 	 	 	 	 	 	 	 	 	
Net income	 	$	0.93	 	$	0.87	 	$	1.69	 	$	1.59	 	
 	 	 	 	 	 	 	 	 	 	
Diluted average shares outstanding	 	233,545,000	 	257,177,000	 	234,993,000	 	260,462,000	 	

 
Textron Inc.
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)

 	 	June 29,
2019	 	December 29,
2018	 	
Assets	 	 	 	 	 	
Cash and equivalents	 	$	775	 	$	987	 	
Accounts receivable, net	 	989	 	1,024	 	
Inventories	 	4,311	 	3,818	 	
Other current assets	 	839	 	785	 	
Net property, plant and equipment	 	2,517	 	2,615	 	
Goodwill	 	2,147	 	2,218	 	
Other assets	 	2,255	 	1,800	 	
Finance group assets	 	963	 	1,017	 	
Total Assets	 	$	14,796	 	$	14,264	 	
 	 	 	 	 	 	
Liabilities and Shareholders’ Equity	 	 	 	 	 	
Short-term debt and current portion of long-term debt	 	$	457	 	$	258	 	
Current liabilities	 	3,122	 	3,248	 	
Other liabilities	 	2,157	 	1,932	 	
Long-term debt	 	2,910	 	2,808	 	
Finance group liabilities	 	814	 	826	 	
Total Liabilities	 	9,460	 	9,072	 	
 	 	 	 	 	 	
Total Shareholders’ Equity	 	5,336	 	5,192	 	
Total Liabilities and Shareholders’ Equity	 	$	14,796	 	$	14,264	 	

 
TEXTRON INC.
MANUFACTURING GROUP
Condensed Schedule of Cash Flows
(In millions)
(Unaudited)

 	 	Three Months Ended	 	Six Months Ended	 	
 	 	June 29,	 	June 30,	 	June 29,	 	June 30,	 	
 	 	2019	 	2018	 	2019	 	2018	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	 	
Net income	 	$	212	 	$	219	 	$	387	 	$	398	 	
Depreciation and amortization	 	99	 	109	 	199	 	212	 	
Changes in working capital	 	(162	)	98	 	(716	)	(278	)	
Changes in other assets and liabilities and non-cash items	 	14	 	42	 	47	 	33	 	
Dividends received from TFC	 	—	 	—	 	50	 	50	 	
Net cash from operating activities of continuing operations	 	163	 	468	 	(33	)	415	 	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	 	
Capital expenditures	 	(76	)	(82	)	(135	)	(159	)	
Net proceeds from corporate-owned life insurance policies	 	2	 	40	 	4	 	98	 	
Proceeds from the sale of property, plant and equipment	 	3	 	1	 	4	 	10	 	
Net cash from investing activities	 	(71	)	(41	)	(127	)	(51	)	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	 	
Decrease in short-term debt	 	(100	)	(2	)	—	 	—	 	
Net proceeds from issuance of long-term debt	 	297	 	—	 	297	 	—	 	
Purchases of Textron common stock	 	(159	)	(571	)	(361	)	(915	)	
Other financing activities, net	 	5	 	30	 	9	 	33	 	
Net cash from financing activities	 	43	 	(543	)	(55	)	(882	)	
Total cash flows from continuing operations	 	135	 	(116	)	(215	)	(518	)	
Total cash flows from discontinued operations	 	(1	)	(1	)	(1	)	(1	)	
Effect of exchange rate changes on cash and equivalents	 	(5	)	(17	)	4	 	(6	)	
Net change in cash and equivalents	 	129	 	(134	)	(212	)	(525	)	
Cash and equivalents at beginning of period	 	646	 	688	 	987	 	1,079	 	
Cash and equivalents at end of period	 	$	775	 	$	554	 	$	775	 	$	554	 	
 	 	 	 	 	 	 	 	 	 	
Manufacturing Cash Flow Before Pension Contributions GAAP to Non-GAAP Reconciliation:	
 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended	 	Six Months Ended	 	
 	 	June 29,	 	June 30,	 	June 29,	 	June 30,	 	
 	 	2019	 	2018	 	2019	 	2018	 	
Net cash from operating activities of continuing operations - GAAP	$	163	 	$	468	 	(33	)	$	415	 	
Less:      Capital expenditures	 	(76	)	(82	)	(135	)	(159	)	
             Dividends received from TFC	 	—	 	—	 	(50	)	(50	)	
Plus:      Total pension contributions	 	12	 	12	 	25	 	25	 	
             Proceeds from the sale of property, plant and equipment	 	3	 	1	 	4	 	10	 	
Manufacturing cash flow before pension contributions - Non-GAAP (a)	$	102	 	$	399	 	(189	)	$	241	 	

(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	 	Six Months Ended	 	
 	 	June 29,	 	June 30,	 	June 29,	 	June 30,	 	
 	 	2019	 	2018	 	2019	 	2018	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	 	
Net income	 	$	217	 	$	224	 	$	396	 	$	413	 	
Depreciation and amortization	 	100	 	111	 	202	 	216	 	
Changes in working capital	 	(174	)	105	 	(703	)	(264	)	
Changes in other assets and liabilities and non-cash items	 	13	 	43	 	45	 	33	 	
Net cash from operating activities of continuing operations	 	156	 	483	 	(60	)	398	 	
Cash flows from investing activities:	 	 	 	 	 	 	 	 	 	
Capital expenditures	 	(76	)	(82	)	(135	)	(159	)	
Net proceeds from corporate-owned life insurance policies	 	2	 	40	 	4	 	98	 	
Finance receivables repaid	 	8	 	9	 	20	 	25	 	
Other investing activities, net	 	4	 	21	 	7	 	30	 	
Net cash from investing activities	 	(62	)	(12	)	(104	)	(6	)	
Cash flows from financing activities:	 	 	 	 	 	 	 	 	 	
Decrease in short-term debt	 	(100	)	(2	)	—	 	—	 	
Net proceeds from issuance of long-term debt	 	297	 	—	 	297	 	—	 	
Principal payments on long-term debt and nonrecourse debt	 	(16	)	(15	)	(35	)	(34	)	
Purchases of Textron common stock	 	(159	)	(571	)	(361	)	(915	)	
Other financing activities, net	 	5	 	30	 	10	 	33	 	
Net cash from financing activities	 	27	 	(558	)	(89	)	(916	)	
Total cash flows from continuing operations	 	121	 	(87	)	(253	)	(524	)	
Total cash flows from discontinued operations	 	(1	)	(1	)	(1	)	(1	)	
Effect of exchange rate changes on cash and equivalents	 	(5	)	(17	)	4	 	(6	)	
Net change in cash and equivalents	 	115	 	(105	)	(250	)	(531	)	
Cash and equivalents at beginning of period	 	742	 	836	 	1,107	 	1,262	 	
Cash and equivalents at end of period	 	$	857	 	$	731	 	$	857	 	$	731	 	

 
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:
 
Manufacturing cash flow before pension contributions
 
Manufacturing cash flow before pension contributions adjusts net cash from operating activities (GAAP) for the following:
 
·                 Deducts capital expenditures and includes proceeds from the sale of property, plant and equipment to arrive at the net capital investment required to support ongoing manufacturing operations;
·                 Excludes dividends received from Textron Financial Corporation (TFC) and capital contributions to TFC provided under the Support Agreement and debt agreements as these cash flows are not representative of manufacturing operations;
·                 Adds back pension contributions as we consider our pension obligations to be debt-like liabilities. Additionally, these contributions can fluctuate significantly from period to period and we believe that they are not representative of cash used by our manufacturing operations during the period.
·                 Excludes taxes paid related to the gain realized in 2018 on the Tools and Test business disposition. We have made this adjustment to the non-GAAP measure because we believe this use of cash is not representative of cash used by our manufacturing operations.
 
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. 
 
Manufacturing Cash Flow Before Pension Contributions GAAP to Non-GAAP Reconciliation and 2019 Outlook:

 	 	Three Months Ended	 	Six Months Ended	 	
 	 	June 29,
2019	 	June 30,
2018	 	June 29,
2019	 	June 30,
2018	 	
Net cash from operating activities of continuing operations - GAAP	 	$	163	 	$	468	 	$	(33	)	$	415	 	
Less:    Capital expenditures	 	(76	)	(82	)	(135	)	(159	)	
            Dividends received from TFC	 	—	 	—	 	(50	)	(50	)	
Plus:    Total pension contributions	 	12	 	12	 	25	 	25	 	
            Proceeds from the sale of property, plant and equipment	 	3	 	1	 	4	 	10	 	
Manufacturing cash flow before pension contributions - Non-GAAP	$	102	 	$	399	 	$	(189	)	$	241	 	

 	 	2019 Outlook	 	
Net cash from operating activities of continuing operations - GAAP	 	$	1,066	-	$	1,166	 	
Less:    Capital expenditures	 	 	(380)	 	 	
            Dividends received from TFC	 	 	(50)	 	 	
Plus:    Total pension contributions	 	 	50	 	 	
            Taxes paid on gain on business disposition	 	 	10	 	 	
            Proceeds from the sale of property, plant and equipment	 	 	4	 	 	
Manufacturing cash flow before pension contributions - Non-GAAP	 	$	700	-	$	800