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S&P Rts Textron Inc's Euro Med-term note Pgrm 'A/A-1'

17 February 2000

S&P Rts Textron Inc's Euro Med-term note Pgrm 'A/A-1'

    NEW YORK--Feb. 17, 2000--Standard & Poor's--Standard & Poor's today assigned its single-'A' and 'A-1' ratings to Textron Inc.'s Euro 2 billion medium-term note program.
    At the same time, Standard & Poor's affirmed its outstanding ratings on Textron and related entities (see list below).
    Proceeds from the sale of the notes will be used for general corporate purposes. The arranger and the principal paying agent of the program is Deutsche Bank AG London, and there are about 10 dealers.
    Textron's ratings are supported by the firm's leading market positions in selected segments of aircraft (business jets and helicopters), automotive parts, and industrial products, its good business diversity, and a strong overall financial profile. A balanced mix of operations mitigates the cyclicality of most of the company's markets and has contributed to steadily improving performance, resulting in increased earnings and cash flow protection measures in recent years. Performance should benefit from a greater focus on core businesses and operating efficiency, new product development, tighter asset management, and generally favorable growth prospects for most of Textron's industries. Debt to capital, net of cash, is currently only around 20%. Ratings incorporate an expectation of increasing, but still moderate, debt use, that should translate into funds from operations to debt averaging about 50% over time.
    Although the early 1999 sale of Textron's consumer finance subsidiary, Avco Financial Services, for $3.9 billion in cash initially reduced business and earnings diversity (Avco contributed about 25% of consolidated operating income), the firm is accelerating its acquisition program to strengthen already solid competitive positions in other segments. Financial flexibility for midsize, bolt-on acquisitions is considerable in view of the under-leveraged capital structure and growing earnings and cash flow. Planned share repurchases, funded by about 40% of Avco's net proceeds, have been largely completed.

    OUTLOOK:STABLE

    Leading market positions, a balanced mix of operations, overall attractive business fundamentals, and prudent financial management should lead to credit measures appropriate for the ratings, Standard & Poor's said. ---CreditWire

RATINGS ASSIGNED
                                                        Rating
Textron Inc.
  Euro 2 billion medium-term note program               A/A-1


OUTSTANDING RATINGS AFFIRMED
                                                        Rating
Textron Inc.
  Corp credit rating                                     A
  Short-term corporate credit rating                     A-1
  Senior unsecured debt                                  A
  Subordinated debt                                      A-
  Bank loan rating                                       A
  Preferred stock                                        BBB+
  Commercial paper                                       A-1
  Euro commercial paper                                  A-1

Textron Capital I
  Preferred stock                                        BBB+
     (gtd by Textron Inc.)


Textron Canada Ltd.
  Commercial paper                                       A-1
     (gtd by Textron Inc.)


Textron Financial Corp.
  Corporate credit rating                                A-
  Short-term corporate credit rating                     A-2
  Senior unsecured debt                                  A-
  Commercial paper                                       A-2