Textron Reports Third Quarter EPS from Continuing Operations of $0.85
PROVIDENCE, R.I. October 16, 2008: Textron Inc. today reported third quarter 2008 income from continuing operations of $210 million or $0.85 per share, compared to third quarter 2007 income from continuing operations of $225 million or $0.88 per share. Last year’s result included a one-time gain related to an insurance settlement, worth about $0.05 per share.
Including discontinued operations, third quarter 2008 net income was $206 million or $0.84 per share, compared with third quarter 2007 net income of $255 million or $1.00 per share.
Revenues in the quarter were $3.5 billion, up 13.6% from $3.1 billion in 2007, as 15.6% growth in the manufacturing businesses offset a decline in revenues at the finance business. Year-to-date cash flow provided by operating activities of continuing operations was $652 million, with free cash flow of $344 million.
“Strength in our aircraft and defense businesses offset weaker than expected performance in the finance business arising from the challenging economic environment,” said Textron Chairman, President and CEO Lewis B. Campbell. “We remain committed to achieving strong performance results at our aircraft and defense businesses as we work through the issues facing us in our other segments,” Campbell added.
Combined backlog at Cessna, Bell and Defense & Intelligence remained at a record $23.5 billion at the end of the quarter.
Campbell announced, “Given the sustained turmoil in world credit markets we are taking a number of strong and measured steps, including:
The first action is to reduce the size of TFC, Textron’s commercial finance business. The company will be exiting its Asset Based Lending and Structured Capital segments, and several additional product lines through an orderly liquidation as market conditions allow. TFC will also limit new originations in its Distribution Finance, Golf, and Resort portfolios, consistent with maintaining franchise value and our commitment to service existing credit-worthy customers.
As a result of the decision to downsize TFC, Textron expects to take a non-cash impairment charge in the fourth quarter of up to $169 million, which represents the current goodwill balance at TFC. The company will also incur restructuring charges for headcount reductions and consolidations.
Textron will make capital contributions to TFC, as appropriate, to strengthen TFC’s capital structure and to maintain certain minimum requirements under TFC’s committed credit facilities and Textron’s support agreement with TFC.
“Going forward, we will continue to carefully evaluate the appropriate range of remaining lending activities at TFC in light of strategic fit and continuing developments in the capital markets, all in a manner that maximizes value for shareholders in any current or future financial market scenarios,” Campbell noted.
In order to maximize funding predictability in the current environment, Textron has suspended its share repurchase program and is exploring a number of options to reduce a portion of its outstanding commercial paper funding.
Finally, Textron is initiating an accelerated overhead cost reduction and productivity improvement program across the enterprise. Including restructuring costs at TFC, the company expects total restructuring charges of about $25 million, with most of the charges occurring in the fourth quarter. Annualized benefits associated with the charges are estimated to be $40 million.