Textron Reports Fourth Quarter 2017 Results; Announces 2018 Financial Outlook

(a) During 2016, we initiated a plan to restructure and realign our businesses by implementing headcount reductions, facility consolidations and other actions in order to improve overall operating efficiency across Textron. As disclosed in our Current Report on Form 8-K filed on January 5, 2018, we decided to take additional restructuring actions to further consolidate operating facilities and streamline product lines. Special charges related to this plan were $48 million and $90 million in the three and twelve months ended December 30, 2017, respectively, and $8 million and $123 million in the three and twelve months ended December 31, 2016, respectively. In addition, we recorded Special charges of $7 million and $40 million in the three and twelve months ended December 30, 2017, respectively, related to the Arctic Cat acquisition, which included restructuring, integration and transaction costs.

(b) On December 22, 2017, the U.S. Government enacted tax reform legislation known as the Tax Cuts and Jobs Act (the "Act"). Income tax expense for the three and twelve months ended December 30, 2017 includes a $266 million one-time charge to reflect our provisional estimate of the net impact of the Act. The charge is primarily related to remeasurement of U.S. federal net deferred tax assets due to the lower enacted tax rate and the Act’s transition tax on previously unremitted earnings of non-U.S. subsidiaries. Textron is continuing its analysis of this legislation and this provisional estimate is subject to change.

(c) The twelve months ended December 31, 2016 include an income tax benefit of $319 million, inclusive of interest, of which $206 million is attributable to continuing operations and $113 million is attributable to discontinued operations. This benefit is a result of the final settlement with the Internal Revenue Service Office of Appeals for our 1998 to 2008 tax years.

(d) For the three months ended December 30, 2017, the diluted average shares used to calculate EPS on a GAAP basis excludes potential common shares (stock options and restricted stock units), due to their antidilutive effect resulting from the net loss. For the twelve months ended December 30, 2017, and the three and twelve months ended December 31, 2016, fully dilutive shares were used to calculate EPS.

(e) Adjusted income from continuing operations and adjusted diluted earnings per share are non-GAAP financial measures as defined in "Non-GAAP Financial Measures" attached to this release. The non-GAAP per share information for the three months ended December 30, 2017 is calculated using diluted average shares outstanding of 266,099,000.

       
 
Textron Inc.
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)
 
           

December 30,
2017

   

December 31,
2016

Assets
Cash and equivalents $ 1,079 $ 1,137
Accounts receivable, net 1,363 1,064
Inventories 4,150 4,464
Other current assets 435 388
Net property, plant and equipment 2,721 2,581
Goodwill 2,364 2,113
Other assets 2,059 2,331
Finance group assets   1,169       1,280
Total Assets $ 15,340     $ 15,358
 
 
Liabilities and Shareholders' Equity
Short-term debt and current portion of long-term debt $ 14 $ 363
Current liabilities 3,646 3,530
Other liabilities 2,006 2,354
Long-term debt 3,074 2,414
Finance group liabilities   953       1,123
Total Liabilities 9,693 9,784
 
Total Shareholders' Equity   5,647       5,574
Total Liabilities and Shareholders' Equity $ 15,340     $ 15,358
 
 
TEXTRON INC.
MANUFACTURING GROUP
Condensed Schedule of Cash Flows
(In millions)
(Unaudited)
                 
                               
Three Months Ended Twelve Months Ended
December 30, December 31, December 30, December 31,
2017     2016 2017     2016
Cash flows from operating activities:
Income (loss) from continuing operations $ (152 ) $ 219 $ 247 $ 832
Depreciation and amortization 113 115 435 437
Changes in working capital 364 468 120 (399 )
Changes in other assets and liabilities and non-cash items 275 49 145 89
Dividends received from TFC   -         -     -         29  
Net cash from operating activities of continuing operations   600         851     947         988  
Cash flows from investing activities:
Capital expenditures (147 ) (140 ) (423 ) (446 )
Net cash used in acquisitions (1 ) (7 ) (331 ) (186 )
Proceeds from the sale of property, plant and equipment 1 2 7 10
Other investing activities, net   1         4     2         1  
Net cash from investing activities   (146 )       (141 )   (745 )       (621 )
Cash flows from financing activities:
Proceeds from long-term debt 347 - 992 345
Principal payments on long-term debt (701 ) (1 ) (704 ) (254 )
Increase (decrease) in short-term debt - (113 ) 2 (3 )
Purchases of Textron common stock (131 ) (26 ) (582 ) (241 )
Other financing activities, net   5         3     26         7  
Net cash from financing activities   (480 )       (137 )   (266 )       (146 )
Total cash flows from continuing operations (26 ) 573 (64 ) 221
Total cash flows from discontinued operations (3 ) - (27 ) (2 )
Effect of exchange rate changes on cash and equivalents   4         (25 )   33         (28 )
Net change in cash and equivalents (25 ) 548 (58 ) 191
Cash and equivalents at beginning of period   1,104         589     1,137         946  
Cash and equivalents at end of period $ 1,079       $ 1,137   $ 1,079       $ 1,137  
 

Manufacturing Cash Flow GAAP to Non-GAAP Reconciliation:

 

                               

Net cash from operating activities of continuing operations - GAAP

$

600

$

851

$

947

$

988

Less: Capital expenditures

(147

)

 

(140

)

(423

)

(446

)

Dividends received from TFC

-

-

-

(29

)

Plus: Total pension contributions

20

14

358

50

Proceeds from the sale of property, plant and equipment

 

1

       

2

   

7

       

10

 

Manufacturing cash flow before pension contributions- Non-GAAP (a)

$

474

     

$

727

 

$

889

     

$

573

 
 
 

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