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Textron Inc. Reports Operating Results (10-Q)

October 28, 2010 | About:
10qk

10qk

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Textron Inc. (TXT) filed Quarterly Report for the period ended 2010-10-22.

Textron Inc. has a market cap of $5.73 billion; its shares were traded at around $20.76 with a P/E ratio of 36 and P/S ratio of 0.5. 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, Larry Robbins of Glenview Capital, Mario Gabelli of GAMCO Investors, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Selling and administrative expense decreased $47 million, 13.5%, in the third quarter of 2010 primarily due to a $34 million reduction at Cessna, mainly due to lower sales commissions, and a $10 million reduction at the Finance segment. Selling and administrative expense decreased $148 million, 14.3%, for the nine months ended October 2, 2010 primarily due to a $76 million reduction at Cessna, largely due to lower sales commissions, professional fees and compensation and related costs, $14 million in lower compensation and related costs at Corporate, $13 million in lower interest on borrowings against company-owned life insurance policies, and a $31 million reduction at the Finance segment. During 2010, the Finance segment was favorably impacted by lower compensation and related costs due to headcount reductions associated with our exit from the non-captive commercial finance business.

For the nine months ended October 2, 2010, Bell s U.S. Government revenues increased $299 million, 24.8%, compared with 2009, reflecting higher volume of $286 million due to V-22 and H-1 deliveries, higher spare parts, service and product support volume of $36 million and improved pricing of $8 million. These increases were partially offset by the impact from revenue recognized in 2009 on the cancelled ARH program of $26 million. Commercial revenues decreased $73 million, 8.8%, due to lower volume of $107 million, reflecting lower helicopter deliveries and service, support and aftermarket service volume, partially offset by improved pricing of $27 million.

For the nine months ended October 2, 2010, Finance revenues decreased $88 million, 31.5%, compared with 2009, primarily due to a $70 million impact from lower average finance receivables of $1.7 billion, $47 million in lower gains on debt extinguishment and a $22 million impact of variable-rate receivable interest rate floors, partially offset by $68 million in lower net portfolio losses. Net portfolio losses decreased primarily as a result of fewer discounts taken on the sale or early termination of finance receivable assets associated with the liquidation of distribution finance receivables, lower impairment charges in the structured capital portfolio and a $23 million gain on the sale of two distribution finance receivable portfolios in the first and third quarters of 2010.

Cessna s segment profit decreased $63 million in the third quarter of 2010, compared with 2009, primarily due to the $70 million impact from lower volume and $12 million in inflation, net of higher pricing, partially offset by improved performance of $19 million. The improved performance included lower warranty expense of $9 million, lower tooling costs of $6 million, labor efficiencies resulting from 2009 furloughs of $6 million and lower selling and administrative expenses of $6 million, largely due to headcount reductions. These improvements were partially offset by lower deposit forfeiture income of $12 million due to fewer order cancellations in 2010.

For the nine months ended October 2, 2010, Cessna s segment profit decreased $222 million due to the $271 million impact from lower volume, a nonrecurring $50 million gain on the 2009 sale of CESCOM assets and $25 million of inflation, net of higher pricing, partially offset by improved cost performance of $124 million. The improved performance included lower inventory reserves and used aircraft write-downs of $59 million, lower engineering, selling and administrative expenses of $58 million, largely due to workforce reductions, and lower tooling costs of $18 million, partially offset by lower deposit forfeiture income of $37 million due to fewer order cancellations in 2010.

Industrial segment profit increased $31 million in the third quarter of 2010, compared with 2009, primarily due to the $23 million impact from higher volume and $27 million in improved performance, partially offset by inflation in excess of higher pricing of $18 million. For the nine months ended October 2, 2010, segment profit increased $128 million, compared with 2009, primarily due to the $104 million impact from higher volume and $77 million in improved performance, partially offset by inflation in excess of higher pricing of $47 million. Cost performance improved in 2010 largely due to the significant efforts made in 2009 to reduce costs through workforce reductions and other initiatives.

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