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Textron Inc. Reports Operating Results (10-Q)

April 30, 2010 | About:
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10qk

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Textron Inc. (TXT) filed Quarterly Report for the period ended 2010-04-03.

Textron Inc. has a market cap of $6.42 billion; its shares were traded at around $23.52 with a P/E ratio of 65.3 and P/S ratio of 0.6. The dividend yield of Textron Inc. stocks is 0.3%. Textron Inc. had an annual average earning growth of 3.1% over the past 10 years.TXT is in the portfolios of Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, John Keeley of Keeley Fund Management, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

Revenues decreased $316 million, or 13%, to $2.2 billion in the first quarter of 2010, compared with the corresponding period of 2009, primarily due to a $460 million decrease in revenues at Cessna and Bell, reflecting reductions in commercial aircraft deliveries, and $46 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. These revenue decreases were partially offset by a $150 million increase in revenues in the Industrial segment largely due to higher volume reflecting improvements in the automotive market and a $40 million increase in revenues at Textron Systems, primarily due to higher defense volumes.

For the first quarter of 2010 and 2009, we incurred $12 million and $32 million in restructuring costs, primarily related to severance at Cessna. We estimate that we will incur approximately $20 million in additional pre-tax restructuring costs during the remainder of 2010, most of which will result in future cash outlays. The additional costs are expected to primarily include relocation costs at Cessna as it consolidates certain operations and severance costs in the Cessna and Finance segments. We expect that the program will be substantially completed in 2010; however, we also expect to incur additional costs to exit the non-captive portion of our commercial finance business over the next two to three years, which are estimated to be within a range of $10 million to $15 million, primarily attributable to severance and retention benefits. By the end of 2010, we expect to have eliminated approximately 11,000 positions worldwide representing approximately 25% of our global workforce since the inception of the restructuring program in the fourth quarter of 2008. As of April 3, 2010, we have terminated approximately 10,500 employees and have exited 25 leased and owned facilities and plants under this program.

In the first quarter of 2010, Cessna s revenues and segment profit decreased $336 million and $114 million, respectively, compared with the first quarter of 2009. Revenues decreased at Cessna primarily due to lower business jet volume in most of its product lines. We delivered 31 jets in the first quarter of 2010, compared with 69 jets in the corresponding period of 2009. This decrease was partially offset by higher used aircraft volume of $10 million, higher CitationAir volume of $9 million and higher spare parts, product support and maintenance volume of $7 million.

Segment profit decreased primarily due to the $122 million impact from lower volume, a nonrecurring $50 million gain on the 2009 sale of CESCOM assets and higher inflation of $15 million, partially offset by improved performance of $68 million. The improved performance includes $36 million in lower engineering, selling and administrative expenses, largely due to workforce reductions, and lower inventory reserves and used aircraft write-downs of $20 million.

Revenues decreased $124 million and segment profit increased $5 million in the first quarter of 2010, compared with the first quarter of 2009. The decrease in revenues primarily reflects lower commercial volume of $89 million, reflecting lower customer demand for helicopters, spares and other support, lower V-22 volume of $39 million, related to the timing of aircraft deliveries, spares and support, and an $18 million impact from revenue recognized in 2009 on the ARH program related to termination support. These decreases were partially offset by higher military spare parts, product support and maintenance volume of $19 million.

Segment profit increased primarily due to improved performance of $36 million reflecting lower warranty costs of $7 million, improved performance related to the H-1 program of $7 million, nonrecurring product launch costs of $8 million incurred in 2009 for the 429 program and lower selling and administrative expenses of $6 million. The improved performance was partially offset by the $28 million impact of lower commercial volume and unfavorable mix and a $3 million impact due to lower net military volume.

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