Textron's Lycoming Unit Offers Comprehensive Customer Care Program For Crankshaft Recall; Company Revises Cost Estimates, Reaffirms Third Quarter Earnings Estimates

    PROVIDENCE, R.I.--Sept. 16, 2002--Textron Inc. announced today that its Lycoming business unit, which manufactures piston engines for general aviation aircraft, is offering a comprehensive customer care program to compensate its customers for the loss of use of their aircraft during a recall program. The recall is needed to replace potentially faulty crankshafts in specific aircraft engines.
    After further evaluation and as a result of offering this customer care program, the estimated cost to Textron is approximately $27 million to recall and replace the shafts and to compensate customers for the loss of use of their aircraft during the recall. Textron will record an after-tax charge to earnings of approximately $0.13 per share in the third quarter to cover the estimated costs of the engine recall and customer care program. This represents the company's best estimate of the cost of the program at this time; the actual costs could be higher or lower depending upon the actual experience of the program, as well as additional recoveries from third parties.
    In another matter, Textron settled a prior-year federal tax dispute that will result in a tax refund that will benefit third quarter earnings by about $0.09 per share. Despite these two recent developments, Textron still expects third quarter earnings per share of approximately $0.68 before special charges and costs related to restructuring, and full-year earnings per share of $3.00 before special charges, costs related to restructuring, the gain from transactions related to the divested Automotive Trim business and a transitional goodwill impairment charge.
    Lycoming recalled approximately 950 airplane engines in August to replace potentially faulty crankshafts manufactured by a third party supplier. In conjunction with a Federal Aviation Administration (FAA) directive, aircraft with these engines have been grounded. After detecting a potentially defective crankshaft in an aircraft beyond the group included in the August recall, Lycoming and the FAA have issued a mandate for inspection of all turbocharged aircraft with engines that use this specific component. This precautionary measure applies to an additional 736 engines, which will be tested in the field within the next 50 hours of operation or within six months, whichever comes first. Lycoming anticipates that only a portion of these crankshafts will need to be replaced.
    "The safety of our customers is of paramount importance," said Lycoming President Mike Wolf. "When we learned of a crankshaft failure beyond the recall group, we decided to proactively inspect each and every aircraft model that contains this component as a precautionary measure."
    Lycoming is offering a comprehensive program to address the costs and inconvenience customers may experience during the recall process. In addition to a complete reassembly of engines with a new crankshaft, new bearings, new related engine consumables and replacement of any internal part that does not meet Lycoming's standards, the program includes reimbursement for pre-approved, reasonable alternate transportation and a 12-month extension of the engine warranty. Lycoming has also assigned a dedicated team of employees to assist customers with the processing of their claims. Customers who have not yet received a notification letter from Lycoming can view a copy at www.lycoming.textron.com or can call 570-323-6181 for additional information.
    Lycoming is an operating division of Textron's Avco Corporation subsidiary. Textron Inc. is a $12 billion multi-industry company with more than 51,000 employees in 40 countries. The company leverages its global network of businesses to provide customers with innovative solutions and services in industries such as aircraft, fastening systems, industrial products, industrial components, and finance. We are known around the world for our powerful brands such as Bell Helicopter, Cessna Aircraft, Kautex, Lycoming, E-Z-GO and Greenlee, among others. More information is available at www.textron.com.

    Forward-looking Information: Certain statements in this release and other oral and written statements made by Textron from time to time are forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or project revenues, income, returns or other financial measures. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following: (a) the extent to which Textron is able to achieve savings from its restructuring plans, (b) changes in worldwide economic and political conditions that impact interest and foreign exchange rates, (c) the occurrence of work stoppages and strikes at key facilities of Textron or Textron's customers or suppliers, (d) government funding and program approvals affecting products being developed or sold under government programs, (e) cost and delivery performance under various program and development contracts, (f) the adequacy of cost estimates for various customer care programs including servicing warranties, (g) successful implementation of supply chain and other cost reduction programs, (h) the timing of certifications of new aircraft products, (i) the occurrence of further downturns in customer markets to which Textron products are sold or supplied, (j) Textron's ability to offset, through cost reductions, raw material price increases and pricing pressure brought by original equipment manufacturer customers, (k) the availability and cost of insurance, (l) pension plan income falling below current forecasts, (m) Textron Financial's ability to maintain credit quality and control costs; and (n) uncertainty in estimating contingent liabilities and establishing reserves tailored to address such contingencies.