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Textron Inc. Reports Operating Results (10-Q)

July 29, 2010 | About:
10qk

10qk

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Textron Inc. (TXT) filed Quarterly Report for the period ended 2010-07-03.

Textron Inc. has a market cap of $5.64 billion; its shares were traded at around $20.63 with a P/E ratio of 36.2 and P/S ratio of 0.6. The dividend yield of Textron Inc. stocks is 0.4%. Textron Inc. had an annual average earning growth of 3.1% over the past 10 years.TXT is in the portfolios of Pioneer Investments, Jim Simons of Renaissance Technologies LLC, Bruce Kovner of Caxton Associates, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC, John Keeley of Keeley Fund Management.

Highlight of Business Operations:

In the second quarter of 2010, revenues increased $97 million, or 4%, to $2.7 billion, compared with the corresponding period of 2009, primarily due to a $210 million increase at Bell and Textron Systems, largely due to higher defense volume, and a $153 million increase in the Industrial segment, mainly due to higher volume reflecting improvements in the automotive industry. Defense volume was up largely due to an increase in deliveries under the V-22 and H-1 programs and of Unmanned Aircraft Systems. These increases were partially offset by a $236 million decrease at Cessna reflecting lower new aircraft deliveries and a $30 million decrease in the Finance segment.

In the first half of 2010, revenues decreased $219 million, or 4%, to $4.9 billion, compared with the corresponding period of 2009, primarily due to a $572 million decrease in revenues at Cessna, reflecting lower new aircraft deliveries, and $76 million in lower revenues at the Finance segment largely due to lower average finance receivables resulting from the continued liquidation of the non-captive portfolio and non-recurring gains on debt extinguishment in 2009. These revenue decreases were partially offset by a $303 million increase in revenues in the Industrial segment largely due to higher volume reflecting improvements in the automotive industry and a $97 million increase in revenues at Textron Systems, primarily due to higher Unmanned Aircraft Systems volume.

Segment profit decreased primarily due to the lower volume, which lowered segment profit by $79 million, partially offset by improved performance of $37 million. The improved performance included lower inventory reserves and used aircraft write-downs of $39 million and lower engineering, selling and administrative expenses of $14 million, largely due to workforce reductions, partially offset by lower forfeiture income of $27 million due to fewer order cancellations in 2010. We wrote down the value of our used aircraft inventory by $41 million in the second quarter of 2009, compared to a write down of $10 million in the second quarter of 2010. At July 3, 2010, net used inventory totaled $104 million.

Segment profit decreased due to the lower volume, which lowered segment profit by $201 million, a nonrecurring $50 million gain on the 2009 sale of CESCOM assets and inflation, net of higher pricing of $13 million, partially offset by improved cost performance of $105 million. The improved performance included lower inventory reserves and used aircraft write-downs of $59 million and lower engineering, selling and administrative expenses of $54 million, largely due to workforce reductions, partially offset by lower forfeiture income of $25 million due to fewer order cancellations in 2010.

Bell s revenues and segment profit increased $29 million and $41 million, respectively, in the first half of 2010, compared with the corresponding period of 2009. The revenue increase reflects higher V-22 and H-1 volume of $119 million, higher military spare parts, product support and maintenance volume of $34 million and improved pricing of $27 million. The increase was partially offset by lower commercial volume of $123 million, reflecting lower customer demand for helicopters, spares and other support, and the impact from revenue recognized in 2009 on the cancelled ARH program of $26 million.

Nonaccrual finance receivables decreased $164 million in the first half of 2010, primarily due to the resolution of several significant accounts through the repossession of collateral, restructure of finance receivables and cash collections, partially offset by new finance receivables identified as nonaccrual in 2010, largely related to accounts secured by golf course property and marinas. The net reductions by collateral type included $111 million for general aviation aircraft, $34 million for golf course property, $22 million for hotels and $22 million for dealer inventory, partially offset by a $39 million net increase in accounts secured by marinas.

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