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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 28, 1996
Commission File Number 1-5480
Textron Inc.
(Exact name of registrant as specified in charter)
Delaware 05-0315468
state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
40 Westminster Street, Providence, R.I. 02903
(401) 421-2800
(Address and telephone number of principal executive offices)
______________
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Class Which Registered
Common Stock - par value $.125; (83,027,315 New York Stock Exchange
shares outstanding at February 28, 1997) Pacific Stock Exchange
Preferred Stock Purchase Rights Chicago Stock Exchange
$2.08 Cumulative Convertible Preferred New York Stock Exchange
Stock, Series A - no par value
$1.40 Convertible Preferred Dividend Stock, New York Stock Exchange
Series B (preferred only as to
dividends) - no par value
8.75% Debentures due July 1, 2022 New York Stock Exchange
7.92% Trust Preferred Securities of New York Stock Exchange
Subsidiary Trust (and Textron Guaranty
with respect thereto)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has
been subject to such filing requirements for the past 90
days. Yes x . No .
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [x]
The aggregate market value of voting stock held by
non-affiliates of the registrant is $8,252,124,965 as of
February 28, 1997.
Portions of Textron's Annual Report to
Shareholders for the fiscal year ended December 28,
1996 are incorporated by reference in Parts I and II of
this Report. Portions of Textron's Proxy Statement for
its Annual Meeting of Shareholders to be held on April 23,
1997 are incorporated by reference in Part III of this
Report.
PART I
ITEM 1. BUSINESS OF TEXTRON*
Textron is a global multi-industry company with
operations in five business segments - Aircraft, Automotive,
Industrial, Systems and Components, and Finance. A listing of the
Divisions within each business segment, including a description of
the product lines of each Division, is incorporated herein by
reference to pages 54 and 55 of Textron's 1996 Annual Report to
Shareholders. Financial information by business segment and
geographic area is incorporated herein by reference to pages 23 and
51 of Textron's 1996 Annual Report to Shareholders. Additional
information regarding each business segment and Textron in general
is set forth below.
Business Segments
Aircraft. The Aircraft segment consists of Bell Helicopter
Textron, The Cessna Aircraft Company and Textron Lycoming. Based
on unit sales, Bell is the largest supplier of helicopters, spare
parts and helicopter-related services in the world. Since it was
founded in 1946, Bell has delivered over 33,000 aircraft to
military and civilian customers in over 120 countries. Bell has
three military and six civilian helicopter models in current
production. Its aircraft are turbine powered, and range in size
from the five-place Bell Model 206 series to the Bell Model 412EP
aircraft, which carries up to fifteen people.
Bell's military business includes both U.S. Government and non-
U.S. Government customers. There are more helicopters manufactured
by Bell in field service in the inventory of the U.S. Government
than manufactured by any other helicopter company. Currently, Bell
is supplying advanced military helicopters, spare parts and product
support to the U.S. and Canadian Governments and to the governments
of several countries in the Pacific Rim, Middle East and Europe.
Military sales to non-U.S. customers are made only with the
concurrence of the U.S. Government.
Bell is also a leading supplier of commercially-certified
helicopters to charter, offshore, utility, corporate, police, fire,
rescue and emergency medical helicopter operators. Bell's non-U.S.
Government business (including non-U.S. military customers)
typically represents 40% to 60% of its annual sales. In 1996, such
sales accounted for approximately 60% of Bell's business.
____________________
* Reference herein to "Textron" includes Textron Inc., its
divisions and subsidiaries. A Textron "Division" is an operating
unit which may be comprised of an unincorporated division of
Textron, a subsidiary of Textron, or an unincorporated division of
a subsidiary.
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Bell is teamed with the Helicopter Division of the Boeing
Company ("Boeing Helicopters") in the development of the V-22
Osprey tiltrotor aircraft for the U.S. Department of Defense.
Tiltrotor aircraft are designed to utilize the benefits of both
helicopters and fixed-wing aircraft. Production of V-22 aircraft
was started in 1996 upon award of a contract for the first four
aircraft. In 1996, Bell and Boeing Helicopters entered into a
joint venture to develop a commercial tiltrotor aircraft designated
the Model 609. First delivery of this nine-place aircraft is
scheduled for 2001.
In 1996, Bell was also awarded a development contract to
upgrade the U.S. Marines' fleet of AH-1W and UH-1N helicopters.
Bell introduced two new civilian helicopter models in 1996:
the single-engine Bell Model 407 (a light helicopter), and the twin-
engine intermediate size Bell Model 430. Other commercial products
and product improvements continue to be developed.
In the light and medium helicopter market, Bell has two major
U.S. competitors and one major European competitor. Certain of its
competitors are substantially larger and more diversified aircraft
manufacturers. Bell markets its products worldwide through its own
sales force as well as through independent representatives. Price,
financing terms, aircraft performance, reliability and product
support are significant factors in the sale of helicopters. Bell
has developed the world's largest distribution system to sell and
support helicopters, serving customers in over 120 countries.
Revenues of Bell accounted for approximately 16%, 18% and 16% of
Textron's total revenues in 1996, 1995 and 1994, respectively.
The Cessna Aircraft Company is, based on unit sales, the
world's largest manufacturer of light and mid-size business jets
and single-engine utility turboprop aircraft. Cessna designs,
manufactures and sells general aviation aircraft, aircraft
propellers, and related accessories worldwide. Based on units
shipped by manufacturers, Cessna's 1996 share of all manufacturers'
worldwide sales of light and mid-size jets was approximately 54%.
Cessna currently has two major product lines, Citation
business jets and single-engine turboprop Caravans. In addition,
Cessna has reentered the business of manufacturing single-engine
piston aircraft, and began deliveries in January 1997.
Cessna currently produces a family of Citation business jets
ranging from the CitationJet to the Citation X. The Citation X is
the world's fastest business jet with a maximum operating speed of
Mach .92. Certification was
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completed and customer deliveries of the Citation X began in 1996.
In addition, deliveries of the new Citation Bravo and Citation Excel
business jets will commence in 1997 and 1998, respectively.
The Cessna Caravan is the world's best selling utility
turboprop. The delivery of the 850th Caravan will occur in early
1997. Caravan deliveries have averaged over 75 aircraft per year
since the Caravan's first delivery in 1985. Caravans are used in
the United States primarily to carry overnight express package
shipments. International uses of Caravans include commuter
airlines, relief flights, tourism and freight.
Cessna markets its products worldwide primarily through its
own sales force as well as through a network of authorized
independent sales representatives. Cessna has four major
competitors for its business jet products, two U.S. and two
foreign. Cessna's aircraft compete with other aircraft that vary
in size, speed, range, capacity, handling characteristics, and
price. Reliability and product support are significant factors in
the sale of these aircraft. Cessna provides its business jet
operators with factory-direct customer support offering 24 hour a
day service and maintenance. More than 40% of the worldwide
Citation fleet of more than 2,400 aircraft receive service through
Cessna-owned service centers. Cessna Caravan and piston customers
receive product support through independently owned service
stations and 24 hour spare parts support through Cessna. Revenues
of Cessna accounted for approximately 12%, 10% and 10% of Textron's
total revenues in 1996, 1995 and 1994, respectively.
Textron Lycoming, formerly reported as part of the Systems and
Components segment, is the world leader in the design, manufacture
and overhaul of reciprocating piston aircraft engines serving the
worldwide general aviation market. Textron Lycoming sells new
products directly to general aviation airframe manufacturers,
including Piper Aircraft, Robinson Helicopter, and SOCATA, a
division of Aerospatiale, and is the exclusive supplier of engines
for Cessna's new product line of single engine aircraft.
Aftermarket sales are made to the more than 180,000 existing owners
of Textron Lycoming products through a worldwide network of
independently owned distributors.
Textron Lycoming's McCauley Propeller Systems unit is a leader
in the general aviation industry. McCauley provides new propellers
directly to original equipment manufacturers ("OEMs") and sells
parts for service and repairs worldwide through independently-owned
distributors. The new Cessna single-engine piston aircraft will
use McCauley propellers exclusively.
Automotive. The Automotive segment, organized under an
umbrella organization called Textron Automotive Company ("TAC"),
consists of the Textron Automotive Trim Operations, CWC Castings,
Kautex, McCord Winn, Micromatic and Randall. These operations sell
primarily to automotive OEMs and their suppliers operating in North
America and Europe and, to a lesser extent, in Latin America and
Asia. TAC is headquartered in Troy, Michigan and
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has over 45 facilities located in the United States, Belgium,
Brazil, Canada, China, the Czech Republic, Germany, Mexico,
the Netherlands,Portugal, Spain, and the United Kingdom.
Through its Textron Automotive Trim Operations, TAC is a
leading worldwide supplier of automotive interior and exterior
plastic components. Interior trim products include instrument
panels, door and sidewall trim, airbag doors, consoles, trim
components, armrests and headliner systems. During 1996, TAC
assumed 100% ownership of Textron Automotive B.V., its former joint
venture in the Netherlands for the manufacture of instrument panels
and, beginning in 1998, door trim. In addition, TAC's trim
facilities manufacture exterior decorative components including
painted bumpers and fascia, body side moldings and claddings,
fender liners, decorative wheel trim, signal lighting and
structural composite bumper beams. Revenues of the Textron
Automotive Trim Operations accounted for 15%, 15% and 16% of
Textron's total revenues in 1996, 1995 and 1994, respectively.
On January 7, 1997, Textron completed the acquisition of
Kautex Werke Reinold Hagen AG of Bonn, Germany and the assets of
its North American affiliate, Kautex North America, Inc.
(collectively "Kautex"). Kautex is a leading manufacturer of blow-
molded plastic fuel tank systems and other blow-molded plastic
technical parts for OEMs throughout Europe, North America and
Brazil. Kautex also manufactures a broad selection of blow-molded
plastic containers for a variety of industrial and consumer
applications. Kautex's sales in 1996 were approximately $500
million from fifteen plants located close to automotive customers
in Germany, Belgium, Brazil, Canada, China, the Czech Republic,
Portugal, Spain, the United Kingdom and the United States.
TAC's other operations manufacture and sell a broad variety of
functional components. CWC Castings designs and manufactures
engine camshafts and vibration damper components for OEMs and the
aftermarket. McCord Winn manufactures seating comfort systems,
windshield washer systems and armatures for precision DC motors.
In 1996, McCord Winn expanded its washer systems business with the
acquisition of Valeo Wiper Systems Limited in Wales (U.K.).
Micromatic manufactures machine tools used in the production of
automobile engines for precision bore and surface finishing, and
spline and gear production. Randall produces fuel filler systems.
More than 70 vehicle models currently carry parts made by TAC,
including Chrysler's Jeep Grand Cherokee, Voyager and Caravan
minivans, Ford's Lincoln Town Car and Windstar and Aerostar mini-
vans, and GM's Cadillac Seville, Corvette and the Venture,
Silhouette and Sintra mini-vans.
TAC's manufacturing operations are supported by a staff of
research and design specialists at TAC's Automotive Technology
Center. These specialists have developed new processes and
products, many of which are patented, that allow TAC to offer its
customers technology driven products and processes. In the
plastics and coatings area, TAC is a recognized leader in
alternative skin materials (including non-PVC materials), spray
urethane and cloth
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integration, energy management foam (including
impact and knee bolsters), the development of modular integrated
assemblies and vertical body panels, and High Crystalline
Polypropylene material for complete mold-in-color interior
components. CWC Castings is a leader in the design and manufacture
of automotive castings. It has developed a selective austempering
heat treatment process for ductile camshafts as well as a vacuum
casting system for hollow steel camshafts. McCord Winn is working
with OEMs worldwide to develop advanced technologies in areas such
as "intelligent" comfort seating systems, brushless motors and
carbon commutation for flexible fuel applications. Micromatic
machine tools are used for cylindrical form generation and surface
finishing.
In the automotive business, there is often a long lead time
from the time a supplier is selected to supply components on a new
car model to the time the supplier can begin shipping production
parts. During this period, the supplier incurs engineering and
development costs. Until recently, the OEMs reimbursed the supplier
for these costs as incurred. Within the last few years, the OEMs
have begun to require that these costs be recovered in the piece
prices charged by the suppliers as the goods are shipped. In
addition, automotive OEMs often require "just-in-time" delivery, so
the manufacturer has to both plan shipments in advance and hold
inventory.
Automotive OEMs and their suppliers are the principal
customers of TAC. The only customers, the loss of which would have
a material adverse effect on TAC, are the U.S. and Europe-based
automotive OEMs and their first-tier suppliers. However, because
of the broad range of products sold to such customers, it is
unlikely that such customers would cease all purchases from TAC.
Each of TAC's businesses faces competition from a number of
other manufacturers based primarily on price, quality, reputation
and delivery. Although TAC is one of the largest manufacturers
offering its range of products and services, it faces strong
competition in all of its market segments. Because of the
diversity of products and services offered, no single company is a
competitor in all market segments. In certain markets, TAC also
competes for business with the OEMs' own operations.
Industrial. The Industrial segment consists of three major
product groups: Fastening Systems, Golf and Turf-Care Products,
and Engineered Products and Components.
The Fastening Systems Group consists of the Avdel, Camcar,
Elco, Textron Aerospace Fasteners (formerly, "Cherry"), Textron
Industries (France) and Textron Fastening Systems-Germany
Divisions. The Fastening Systems Group manufactures and sells
fasteners, fastening systems and installation tools to the
aerospace, appliance, automotive, construction, do-it-yourself,
electronics, general industrial and transportation markets. Sales
are made to a wide range of customers, including OEMs, distributors
and consumers. Fasteners manufactured by the Group include rivets,
threaded and non-threaded fasteners, cold-formed components, metal
stampings, plastic components, and assemblies
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which incorporate
such products. Textron acquired Valois Industries (now renamed
Textron Industries, S.A.S.), a France-based manufacturer of
engineered fastening systems, in April 1996. The German operations
of Valois and Boesner (acquired in 1995) were combined to form
Textron Fastening Systems-Germany. In 1996, Textron also acquired
Xact Products, a Michigan-based manufacturer of metal stampings,
which is now part of the Elco operation. In addition, in 1996
certain of Randall's metal stampings operations (previously
included in the Automotive segment) were combined with Elco.
Although the Fastening Systems Group is one of the largest
manufacturers of its products and services, there are hundreds of
competitors of the Fastening Systems Group ranging from small
proprietorships to large multinational companies. As is the case
with all Divisions of the Industrial segment, competition is based
primarily on price, quality, reputation and delivery. In addition,
larger customers of fastening systems tend to procure products and
services from the larger suppliers, except for "niche" products
which may be sourced from smaller companies. Only the loss of the
major OEM automotive customers and their first-tier suppliers would
have a material adverse effect on the Fastening Systems Group.
However, because of the broad range of products sold to such
customers, it is unlikely that such customers will cease all
purchases from the Fastening Systems Group.
The Golf and Turf-Care Products Group consists of the E-Z-GO
Division, which manufactures and sells electric and gasoline
powered golf cars and multipurpose utility vehicles, and the
Jacobsen Division, which manufactures and sells professional mowing
and turf maintenance equipment. In 1996, Jacobsen acquired The
Bunton Company, a leading manufacturer of commercial lawn mowers.
The customers of the Golf and Turf-Care Products Group consist
primarily of golf courses, resort communities and commercial and
industrial users such as airports and factories. Sales are made
directly through factory branches, through a network of
distributors and to end-users. Many sales of golf and turf-care
equipment (both at the distributor and end-user level) are financed
through Textron Financial Corporation, both for marketing purposes
and as an additional source of revenue to Textron.
The Engineered Products and Components Group consists of
Divisions manufacturing a wide range of products, including double
enveloping worm gear speed reducers, gear motors and gear sets
(Cone Drive); powered equipment, electrical test instruments and
hand tools (Greenlee); and watch attachments and fashion jewelry
(Speidel). In 1996, Greenlee purchased Gustae Klauke GmbH & Co.
KG (Remschied), a Germany-based manufacturer of electrical
connectors, and its related companies. Products of these Divisions
are sold to a wide variety of customers, including OEMs,
distributors and end-users. Also included in the Engineered
Products and Components Group is HR Textron ("HRT"), formerly
reported as part of the Systems and Components segment. HRT
designs and manufactures control systems and components for
aircraft, armored vehicles, and commercial applications. Its
aerospace and defense products are marketed directly to the U.S.
Government and OEMs and, in the aftermarket, both directly and
through
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service centers. In January 1997, Textron acquired Zurich,
Switzerland-based Maag Pump Systems AG and Milan, Italy-based Maag
Italia S.p.A., manufacturers of gears, gear pumps and gear systems.
Systems and Components. The Systems and Components segment
consists of four Divisions which serve both commercial and military
customers, primarily in aerospace markets, with an extensive
offering of systems, subsystems, components, materials and
services.
Fuel Systems Textron ("FST") designs, manufactures and
overhauls gas turbine engine injection and metering devices, fuel
distribution valves, and afterburner fuel injection systems for
commercial and military aircraft, and industrial, marine, and
vehicular markets. OEM sales are made directly to engine
manufacturers with aftermarket overhaul and repair services sold
directly to domestic end users and through a distributor for
international customers. FST invests in the design and development
of innovative, proprietary products, with on-site engineering
support at customer facilities and an advanced product development
facility to extend the customers' own design activities.
Textron Marine & Land Systems ("TM&LS") is a world leader in
the design and construction of advanced technology air cushion
vehicles, surface effect ships, high performance search and rescue
vessels, light armored combat vehicles, and suspension systems.
TM&LS has products operating in over 35 countries. These products
are marketed directly in the United States and through sales
representatives and distributors internationally. In 1996,
deliveries commenced for the Engineering/Manufacturing/Development
phase of the U.S. Army's Armored Security Vehicle as a prelude to
full production. In addition, a new contract for the development
of a Service Life Extension Program for the Landing Craft Air
Cushion (LCAC) was received, and the U.S. Coast Guard exercised an
option for an additional 20 Motor Lifeboats under an existing
production contract.
Textron Systems is a leading supplier of "smart" munitions,
airborne surveillance systems, and automatic aircraft landing
systems to the U.S. Department of Defense. Textron Systems also
supplies a number of key components and specialty materials for
critical defense needs, including infrared detectors, high strength
composites, reentry systems and materials, and high power lasers.
Once exclusively a supplier to the Department of Defense, Textron
Systems now applies its technologies to non-defense markets.
Current commercial products include advanced composites for
automotive, industrial, sporting goods and aircraft manufacturers;
laser ultrasonic systems for industrial control; infrared sensors
for medical and industrial applications; fire protection and
insulating materials for oil and chemical companies worldwide; and
unique decorative materials for automotive and other markets.
While Textron Systems sells most of its products directly to its
customers, it also sells some products through sales
representatives and distributors.
Turbine Engine Components Textron ("TECT") is one of the
world's largest independent suppliers of internal components for
gas turbine engines for aircraft and industrial applications. Its
products include fan and compressor
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blades, vanes, shafts, disks,
rotors, blisks and other rotating components; the forgings from
which those products are machined; and stationary components of
turbine engines, such as frames, diffusers, and air collectors.
TECT manufactures its products to the specifications of its
customers, and most of its sales are made directly to its
customers.
The principal competitive factors affecting sales of the
products of the Systems and Components segment are price, quality,
customer service, performance, reliability, reputation and existing
product base.
In September 1996, Textron Aerostructures, which designs and
manufactures structural assemblies for aircraft and space vehicles,
was sold to The Carlyle Group.
Finance. The Finance segment consists of Avco Financial
Services ("AFS") and Textron Financial Corporation ("TFC").
AFS is primarily engaged in consumer finance and insurance
activities. AFS's finance operations mainly involve loans made by
the Avco Financial Services Group, consisting of consumer loans
which are unsecured or secured by personal property, real estate
loans secured by real property, and retail installment contracts,
principally covering personal property. AFS's insurance business
consists primarily of the sale of credit life, credit disability
and casualty insurance, offered through the Avco Insurance Services
Group, a significant part of which is directly related to AFS's
finance activities. AFS's consumer finance and insurance
activities are conducted through its more than 1,200 branch offices
located in the United States, Australia, Canada, Hong Kong, New
Zealand, Spain and the United Kingdom. In 1996, AFS acquired
Tuckahoe Leasing, Inc., a Canadian provider of equipment financing,
and Insurex Canada Inc., a provider of insurance premium financing.
AFS's loan business is regulated by laws that, among other
things, can limit maximum charges for loans and the maximum amount
and term thereof. Such laws also require disclosure to customers
of the interest rate and other basic terms of most credit
transactions and give customers a limited right to cancel certain
loans and retail installment contracts without penalty. The
insurance business is subject to licensing and regulation by state
authorities.
The consumer finance business is highly competitive, with
price and service being the principal competitive factors. AFS's
competitors include not only other companies operating under
consumer loan laws, but also other types of lending institutions
not so regulated and usually not limited in the size of their
loans, such as companies which finance the sale of their own
merchandise or the merchandise of others, industrial banks, the
personal loan departments of commercial banks and credit unions.
AFS's strongest competition is from commercial banks and credit
unions. The interest rates charged by these lenders are usually
lower than the rates charged by AFS. AFS's insurance businesses,
to the extent not related to AFS's finance activities, compete with
many other insurance companies offering similar
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products. Revenues
of AFS accounted for approximately 19%, 20% and 17% of Textron's
total revenues in 1996, 1995 and 1994, respectively.
TFC is a diversified commercial finance company specializing
in aircraft, golf and equipment financing and revolving credit
arrangements. TFC provides commercial financing for a wide range
of customers, including those who purchase or lease Textron
products and certain suppliers to Textron Divisions. TFC presently
offers its services primarily in the United States and, to a lesser
extent, in Europe and Canada, through its 11 business units. Each
TFC business unit has a discrete market focus and specific profit
objectives and is staffed to provide responsive services to its
market. TFC's activities are subject to a variety of federal and
state regulations.
The businesses in which TFC operates are highly competitive.
TFC is subject to competition from various types of financing
institutions, including banks, leasing companies, insurance
companies, independent finance companies associated with
manufacturers and finance companies that are subsidiaries of
banking institutions. Competition within the commercial finance
industry is primarily focused on price and service.
Finance Receivables
The following table presents the Finance segment's outstanding
finance receivables by country:
December 31,
1996 1995
(In millions)
United States $7,096 $6,750
Canada 1,079 1,013
Australia 1,067 1,026
United Kingdom 692 632
Other countries 488 473
$10,422 $9,894
At December 31, 1996, finance receivables in the United States
represented 68% of Textron's total finance receivables outstanding.
At such date, no receivables outstanding in any one state other
than California exceeded 8% of the United States portfolio. In
California, outstanding receivables represented 15% of the United
States portfolio and 10% of the consolidated portfolio.
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The following table presents accruing loans on which one or
more installments were more than 60 days past due on a contractual
basis (expressed as a percentage of the related gross receivables
outstanding):
Years ended Consumer Commercial Total
December, 31 loans loans loans
1996 3.25% 0.21% 2.32%
1995 2.89% 0.24% 2.10%
The following table shows gross and net write-offs, the
percentages which those amounts bear to average finance
receivables, and the amount of the provision for losses charged to
income:
Gross write-offs Recoveries Net write-offs
Percentage from Precentage Provision
of average receivables of average for losses
finance previously finance
amount receivables written off amount receivables
Years ended
December 31,
(In millions)
1996
Consumer $230 3.3% $36 $194 2.8% $203
Commercial 30 1.0% 3 27 0.9% 27
$260 2.6% $39 $221 2.2% $230
1995
Consumer $177 2.6% $33 $144 2.1% $149
Commercial 25 0.9% 4 21 0.7% 20
$202 2.1% $37 $165 1.7% $169
1994
Consumer $142 2.5% $28 $114 2.0% $136
Commercial 27 1.0% 3 24 0.4% 26
$169 2.0% $31 $138 1.6% $162
Backlog
Information regarding Textron's backlog of government and
commercial orders at the end of the past two fiscal years is
contained on page 30 of Textron's 1996 Annual Report to
Shareholders, which page is incorporated herein by reference.
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Approximately 37% of Textron's total backlog at December 28,
1996, represents orders which are not expected to be filled within
the 1997 fiscal year. At December 28, 1996, approximately 95% of
the total government backlog of $2.2 billion was funded.
Government Contracts
In 1996, 24% and 50% of the revenues of the Aircraft and the
Systems and Components segments, respectively, constituting in the
aggregate 10% of Textron's consolidated revenues, were generated by
or resulted from contracts with the U.S. Government. U.S.
Government business is subject to competition, changes in
procurement policies and regulations, the continuing availability
of Congressional appropriations, world events, and the size and
timing of programs in which Textron may participate.
A substantial portion of Textron's government contracts are
fixed-price or fixed-price incentive contracts. Contracts that
contain incentive pricing terms provide for upward or downward
adjustments in the prices paid by the U.S. Government upon
completion of the contract or any agreed portion thereof, based on
cost or other performance factors. U.S. Government contracts
generally may be terminated in whole or in part at the convenience
of the U.S. Government or if the contractor is in default. Upon
termination of a contract for the convenience of the U.S.
Government, the contractor is normally entitled to reimbursement
for allowable costs incurred (up to a maximum equal to the con
tract price) and an allowance for profit or adjustment for loss if
the contractor would have incurred a loss had the entire contract
been completed. If, however, a contract is terminated for default:
(i) the contractor is paid such amount as may be agreed upon for
manufacturing materials and partially completed products accepted
by the U.S. Government; (ii) the U.S. Government is not liable for
the contractor's costs with respect to unaccepted items and is
entitled to repayment of advance payments and progress payments, if
any, related to the terminated portions of the contract; and (iii)
the contractor may be liable for excess costs incurred by the U.S.
Government in procuring undelivered items from another source.
Research and Development
Information regarding Textron's research and development
expenditures is contained on page 47 of Textron's 1996 Annual
Report to Shareholders, which page is incorporated herein by
reference.
Patents and Trademarks
Textron owns, or is licensed under, a number of patents and
trademarks throughout the world relating to products and methods of
manufacturing. Patents and trademarks have been of value in the
past and are expected to be of value in the future; however, the
loss of any single patent or group of patents would not, in the
opinion of Textron, materially affect the conduct of its business.
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Environmental Considerations
Textron's operations are subject to numerous laws and
regulations designed to protect the environment. Compliance with
such laws and expenditures for environmental control facilities
have not had, and are not expected to have, a material effect on
capital expenditures, earnings or the competitive position of
Textron. Additional information regarding environmental matters
is contained on pages 30 and 50 of Textron's 1996 Annual Report to
Shareholders, which pages are incorporated herein by reference.
Employees
At December 28, 1996, Textron had approximately 57,000
employees.
Recent Development
On February 26, 1997, Textron's Board of Directors declared a
two-for-one split of Textron common stock in the form of a stock
dividend, subject to shareholder approval of an increase in
Textron's authorized number of common shares from 250 million to
500 million shares. If the increase is approved at Textron's
Annual Meeting on April 23, 1997, the new shares will be
distributed on June 1, 1997, to shareholders of record on the close
of business on May 9, 1997.
ITEM 2. PROPERTIES
At December 28, 1996, Textron operated a total of 142 plants
located throughout the United States and 30 plants outside the
United States. Of the total of 172 plants, Textron owned 113 and
the balance were leased. In the aggregate, the total manufacturing
space was approximately 30 million square feet.
In addition, Textron owns or leases offices, warehouse and
other space at various locations throughout the United States and
outside the United States. Textron also owns or leases such
machinery and equipment as are necessary in the operation of its
Divisions. Textron considers the productive capacity of the plants
operated by each of its business segments to be adequate. In
general, the plants and machinery are in good condition, are
considered to be adequate for the uses to which they are being put,
and are substantially in regular use.
ITEM 3. LEGAL PROCEEDINGS
Lawsuits and other proceedings are pending or threatened
against Textron and its subsidiaries. Some allege violations of
federal government procurement regulations, involve environmental
matters, or are or purport to be class actions. Some seek
compensatory, treble or punitive damages in substantial amounts;
fines, penalties or restitution; or remediation of contamination.
Under federal government procurement regulations, some could result
in suspension or debarment of Textron or its subsidiaries from
U.S. Government contracting for a period of time. On the basis of
information presently available, Textron believes that any
liability for these suits and proceedings would not have a material
effect on Textron's net income or financial condition.
13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of Textron's security
holders during the last quarter of the period covered by this
Report.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning
the executive officers of Textron as of February 28, 1997. Unless
otherwise indicated, the employer is Textron.
Name Age Position
James F. Hardymon 62 Chairman since 1993, and Chief
Executive Officer since 1992;
formerly President, 1989 to
1993; and Chief Operating
Officer, 1989 to 1991;
Director since 1989.
Lewis B. Campbell 50 President and Chief Operating
Officer since 1994; formerly
Executive Vice President and
Chief Operating Officer, 1992
to 1993; Vice President of
General Motors (1988 to 1992)
and General Manager of its GMC
Truck Division (1991 to 1992);
Director since 1994.
Mary L. Howell 44 Executive Vice President,
Government and International
since 1995; formerly Senior
Vice President Government and
International Relations, 1993
to 1995; Vice President
Government Affairs, 1985 to
1993.
Wayne W. Juchatz 50 Executive Vice President and
General Counsel since 1995;
formerly Executive Vice
President and General Counsel
of R.J. Reynolds Tobacco
Company, 1994 to 1995; Senior
Vice President, General
Counsel and Secretary of R.J.
Reynolds Tobacco Company, 1987
to 1994.
Stephen L. Key 53 Executive Vice President and
Chief Financial Officer since
1995; formerly Executive Vice
President and Chief Financial
Officer of ConAgra, Inc., 1992
to 1995; Managing Partner of
the New York office of Ernst &
Young (formerly Arthur Young),
1988 to 1992.
William F. Wayland 61 Executive Vice President
Administration and Chief Human
Resources Officer since 1993;
formerly
14
Executive Vice President Human
Resources, 1989 to 1993.
Herbert L. Henkel 48 President, Textron Industrial
Products since 1995; formerly
Group Vice President, Textron
Inc., 1993 to 1995; President
of the Greenlee Textron
Division, 1987 to 1993.
Richard A. Watson 52 Senior Vice President and
Treasurer since October 1995;
formerly Senior Vice
President, Financial Services,
August 1995 to October 1995;
Group Vice President, 1990 to
August 1995.
Frederick K. Butler 45 Vice President and Secretary
since January 1997; formerly
Group General Counsel
Financial Services, 1995 to
1996; Assistant General
Counsel, 1994 to 1995; Vice
President and General Counsel
of Paul Revere Investment
Management Company, 1993 to
1994; Senior Vice
President/Law of Textron
Investment Management Company,
1991 to 1993.
Peter B. S. Ellis 43 Vice President Strategic
Planning since 1995; formerly
Managing Director,
Telecommunications Practice of
Arthur D. Little, Inc., 1991
to 1995.
Douglas A. Fahlbeck 51 Vice President Mergers and
Acquisitions since 1995;
formerly Executive Vice
President and Chief Financial
Officer of Textron Financial
Corporation, 1994 to 1995;
Senior Vice President and
Chief Financial Officer of
Textron Financial Corporation,
1985 to 1994.
Arnold M. Friedman 54 Vice President and Deputy
General Counsel since 1984.
William B. Gauld 43 Vice President Corporate
Information Management and
Chief Information Officer
since 1995; formerly Staff
Vice President, Corporate
Information Management and
Chief Information Officer,
1994 to 1995; Chief
Information Officer of General
Electric (Electrical
Distribution and Control
business) 1992 to 1994;
Manager, Manufacturing Systems
of General Electric
(Appliances), 1989 to 1992.
Carol J. Grant 43 Vice President Human Resources
since January 1997; formerly
Vice President and Chief
Executive Officer of NYNEX
(Rhode Island Strategic
Business Unit), 1993 to
January 1997; Vice President
Public Affairs and
Communications of NYNEX -
Rhode Island, 1991 to 1993.
Gregory E. Hudson 50 Vice President Taxes since
1987.
15
William P. Janovitz 54 Vice President Financial
Management since January 1997;
formerly Vice President
Financial Reporting, 1995 to
January 1997; Vice President
and Controller, 1983 to 1995.
Mary F. Lovejoy 41 Vice President Communications
and Investor Relations since
September 1996; formerly Vice
President Investor Relations,
1995 to September 1996;
Director of Investor
Relations, 1993 to 1995; Vice
President and Senior Corporate
Banker of The First National
Bank of Chicago, 1991 to
1993.
John W. Mayers, Jr. 43 Vice President Risk Management
and Insurance since January
1997; formerly Director Risk
Management and Insurance, 1993
to January 1997; Treasurer of
Textron Financial Corporation,
1990 to 1993.
Frank W. McNally 57 Vice President Employee
Relations and Benefits since
1995; formerly Staff Vice
President, Employee Relations
and Benefits, 1993 to 1995;
Staff Vice President Employee
Relations, 1992 to 1993;
Director, Employee Relations,
1991 to 1992.
Gero K. H. Meyersiek 49 Vice President International
since February 1996; formerly
Vice President of Textron
International Inc., 1995 to
February 1996; Vice President,
International Business
Development of GE Financial
Services, 1991 to 1994.
Freda M. Peters 55 Vice President Executive
Development and Human Resource
Policy and Compliance since
January 1997; formerly
Director
Management/Organization
Development, July 1996 to
January 1997; Vice President,
Human Resources of Branson
Ultrasonics Corporation
(subsidiary of Emerson
Electric Company), 1985 to
July 1996.
Daniel L. Shaffer 60 Vice President Audit and
Business Ethics since 1994;
formerly President of
Textron's Aircraft Engine
Components Division, 1992 to
1994; Vice President Finance
of the Textron Systems
Division, 1984 to 1992.
Richard F. Smith 57 Vice President Government
Affairs since August 1995;
Staff Vice President
Government Affairs, March 1995
to August 1995; Director
Government Affairs, 1985 to
March 1995.
Richard L. Yates 46 Vice President and Controller
since 1995; formerly Executive
Vice President, Chief
Financial Officer and
Treasurer of Paul Revere, 1994
to 1995; Senior Vice
President, Chief Financial
Officer and Treasurer of Paul
Revere, 1991 to 1994.
16
John F. Zugschwert 63 Vice President Government
Marketing since 1995; Staff
Vice President, Washington
Operations, 1993 to 1995; Vice
President, Washington
Operations of Bell Helicopter
Textron, 1991 to 1993.
No family relationship exists between any of the individuals
named above.
PART II
ITEM 5. MARKETS FOR THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
Textron's Common Stock is traded on the New York, Chicago and
Pacific Stock Exchanges. Additional information regarding "Markets
for the Registrant's Common Equity and Related Stockholder Matters"
is contained on pages 52 and 53 and on the inside back cover of
Textron's 1996 Annual Report to Shareholders, which pages are
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Information regarding "Selected Financial Data" is contained in
the Selected Financial Information on page 53 of Textron's 1996
Annual Report to Shareholders, which page is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and
Results of Operations is contained on pages 24 through 30 of
Textron's 1996 Annual Report to Shareholders, which pages are
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and the supplementary
information listed in the accompanying index to financial
statements and financial statement schedules are filed as part of
this Report.
17
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding Textron's directors is contained on pages
2 through 7 and page 10 of Textron's Proxy Statement for the
Annual Meeting of Shareholders to be held on April 23, 1997, which
pages are incorporated herein by reference.
Information regarding Textron's executive officers is included
on pages 14 through 17 of Part I of this Report.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding "Executive Compensation" is contained on
pages 10 through 20 and pages 23 through 26 of Textron's Proxy
Statement for the Annual Meeting of Shareholders to be held on
April 23, 1997, which pages are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Information regarding "Security Ownership of Certain Beneficial
Holders" and "Security Ownership of Management" is contained on
pages 9 and 10 of Textron's Proxy Statement for the Annual Meeting
of Shareholders to be held on April 23, 1997, which pages are
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related
transactions is contained on pages 19 and 20 of Textron's Proxy
Statement for the Annual Meeting of Shareholders to be held on
April 23, 1997, which pages are incorporated herein by reference.
18
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) Financial Statements and Schedules
The consolidated financial statements, supplementary
information and financial statement schedules listed in the
accompanying index to financial statements and financial statement
schedules are filed as part of this Report.
Exhibits
3.1A Restated Certificate of Incorporation of
Textron as filed March 24, 1988. Incorporated by
reference to Exhibit 3.1 to Textron's Annual Report
on Form 10-K for the fiscal year ended January 2,
1988.
3.1B Amendment to Certificate of Designations,
Preferences and Rights of Series C Junior
Participating Preferred Stock as filed March 20,
1996.
3.2 By-Laws of Textron, restated December 10, 1992.
Incorporated by reference to Exhibit 3.2 to
Textron's Annual Report on Form 10-K for the fiscal
year ended January 2, 1993.
NOTE: Exhibits 10.1 through 10.20 below are
management contracts or compensatory plans,
contracts or agreements.
10.1 Annual Incentive Compensation Plan For Textron
Employees. Incorporated by reference to Exhibit
10.1 to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995.
10.2 Deferred Income Plan For Textron Key
Executives. Incorporated by reference to Exhibit
10.2 to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995.
10.3 Severance Plan For Textron Key Executives.
Incorporated by reference to Exhibit 10.3 to
Textron's Annual Report on Form 10-K for the fiscal
year ended December 30, 1995.
10.4 Special Benefits for Textron Key Executives.
Incorporated by reference to Exhibit 10.4 to
Textron's Annual Report on Form 10-K for the fiscal
year ended December 30, 1995.
10.5 Supplemental Benefits Plan For Textron Key
Executives with Market Square Profit Sharing Plan
Schedule. Incorporated by reference to Exhibit 10.5
to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995.
10.6 Supplemental Retirement Plan For Textron Key
Executives. Incorporated by reference to Exhibit
10.6 to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995.
19
10.7 Survivor Benefit Plan For Textron Key
Executives. Incorporated by reference to Exhibit
10.7 to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995.
10.8A Textron 1982 Long-Term Incentive Plan ("1982
Plan"). Incorporated by reference to Exhibit
10.5(a) to Textron's Annual Report on Form 10-K for
the fiscal year ended December 31, 1988.
10.8B First Amendment to 1982 Plan. Incorporated by
reference to Exhibit 10.5(b) to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 3, 1987.
10.8C Second Amendment to 1982 Plan. Incorporated by
reference to Exhibit 10.5(c) to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 2, 1988.
10.9A Textron 1987 Long-Term Incentive Plan ("1987
Plan"). Incorporated by reference to Exhibit 10.6
to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989.
10.9B First Amendment to 1987 Plan. Incorporated by
reference to Exhibit 10.6(b) to Textron's Annual
Report on Form 10-K for the fiscal year ended
December 28, 1991.
10.10A Textron 1990 Long-Term Incentive Plan ("1990
Plan"). Incorporated by reference to Exhibit 10.7
to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989.
10.10B First Amendment to 1990 Plan. Incorporated by
reference to Exhibit 10.7(c) to Textron's Annual
Report on Form 10-K for the fiscal year ended
December 28, 1991.
10.10C Second Amendment to 1990 Plan. Incorporated by
reference to Exhibit 10.7(c) to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 2, 1993.
10.11 Textron 1994 Long-Term Incentive Plan.
Incorporated by reference to Exhibit 10 to Textron's
Quarterly Report on Form 10-Q for the fiscal quarter
ended July 2, 1994.
10.12 Form of Indemnity Agreement between Textron and
its directors and executive officers. Incorporated
by reference to Exhibit A to Textron's Proxy
Statement for its Annual Meeting of Shareholders on
April 29, 1987.
10.13A Pension Plan for Directors as amended by a
First Amendment (discontinued as of September 30,
1996). Incorporated by reference to Exhibit 10.14
to Textron's Annual Report on Form 10-K for the
fiscal year ended December 31, 1988.
10.13B Second Amendment to Pension Plan for Directors
(discontinued as of September 30, 1996).
Incorporated by reference to Exhibit 10.16(b) to
Textron's Annual Report on Form 10-K for the fiscal
year ended December 29, 1990.
10.14 Deferred Income Plan for Non-Employee
Directors.
20
10.15A Employment Agreement between Textron and James
F. Hardymon dated November 24, 1989 ("Employment
Agreement"). Incorporated by reference to Exhibit
10.9 to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989.
10.15B Amendment dated as of December 15, 1994 to
Employment Agreement. Incorporated by reference to
Exhibit 10.10B to Textron's Annual Report on Form 10-
K for the fiscal year ended December 31, 1994.
10.16A Employment Agreement between Textron and Lewis B.
Campbell dated September 22, 1992. Incorporated by
reference to Exhibit 10.9 to Textron's Annual Report
on Form 10-K for the fiscal year ended January 2,
1993.
10.16B Retention Award granted to Lewis B. Campbell on
December 14, 1995. Incorporated by reference to
Exhibit 10.16B to Textron's Annual Report on Form 10-
K for the fiscal year ended December 30, 1995.
10.17 Employment Agreement between Textron and Mary
L. Howell dated May 4, 1993. Incorporated by
reference to Exhibit 10.11 to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 1, 1994.
10.18 Employment Agreement between Textron and Wayne
W. Juchatz dated November 1, 1995. Incorporated
by reference to Exhibit 10.18 to Textron's Annual
Report on Form 10-K for the fiscal year ended
December 30, 1995.
10.19 Employment Agreement between Textron and
Stephen L. Key dated November 1, 1995. Incorporated
by reference to Exhibit 10.19 to Textron's Annual
Report on Form 10-K for the fiscal year ended
December 30, 1995.
10.20 Employment Agreement between Textron and
William F. Wayland dated January 1, 1989.
Incorporated by reference to Exhibit 10.12 to
Textron's Annual Report on Form 10-K for the fiscal
year ended December 30, 1989.
10.21A Credit Agreement dated as of November 1, 1993
among Textron, the Lenders listed therein and
Bankers Trust Company as Administrative Agent
("Credit Agreement"). Incorporated by reference to
Exhibit 10.20A to Textron's Annual Report on Form 10-
K for the fiscal year ended January 1, 1994.
10.21B First Amendment dated as of October 30, 1994 to
Credit Agreement. Incorporated by reference to
Exhibit 10.22B to Textron's Annual Report on Form 10-
K for the fiscal year ended December 31, 1994.
10.21C Second Amendment to Credit Agreement dated as
of July 1, 1995. Incorporated by reference to
Exhibit (b) (3) to Schedule 14D-1 filed by Textron
on September 19, 1995.
10.21D Third Amendment to Credit Agreement dated as of
July 1, 1996.
21
12.1 Computation of ratio of income to combined
fixed charges and preferred stock dividends of the
Parent Group.
12.2 Computation of ratio of income to combined
fixed charges and preferred stock dividends of
Textron Inc. including all majority-owned
subsidiaries.
13 A portion (pages 23 and following) of Textron's
1996 Annual Report to Shareholders. Except for
pages or items specifically incorporated by
reference herein, such portion of Textron's 1996
Annual Report to Shareholders is furnished for the
information of the Commission and is not filed as
part of this Report.
21 Certain subsidiaries of Textron. Other
subsidiaries, which considered in the aggregate do
not constitute a significant subsidiary, are omitted
from such list.
23 Consent of Independent Auditors.
24.1 Power of attorney.
24.2 Certified copy of a resolution of the Board of
Directors of Textron.
27 Financial Data Schedule.
(b) Reports on Form 8-K
During the quarter ended December 28, 1996, Textron filed
with the Securities and Exchange Commission a report on
Form 8-K dated November 8, 1996, reporting, under Item 5
(Other Events) and Item 7 (Exhibits), information
regarding the sale to Provident Companies, Inc. of all the
outstanding shares of The Paul Revere Corporation, 83% of
which are owned by Textron.
22
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly
caused this Annual Report on Form 10-K to be signed on its
behalf by the undersigned, thereunto duly authorized on this
14th day of March, 1997.
TEXTRON INC.
Registrant
By: /s/ Michael D. Cahn
Michael D. Cahn
Attorney-in-fact
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below on this 14th day of March,
1997, by the following persons on behalf of the registrant and in
the capacities indicated:
NAME TITLE
* Chairman and Chief
James F. Hardymon Executive Officer,
Director (principal
executive officer)
* President and Chief
Lewis B. Campbell Operating Officer, Director
* Director
H. Jesse Arnelle
* Director
Teresa Beck
23
* Director
R. Stuart Dickson
* Director
Paul E. Gagne
* Director
John D. Macomber
* Director
Dana G. Mead
* Director
Barbara Scott Preiskel
* Director
Brian H. Rowe
* Director
Sam F. Segnar
* Director
Jean Head Sisco
24
* Director
John W. Snow
* Director
Martin D. Walker
* Director
Thomas B. Wheeler
* Executive Vice President and
Stephen L. Key Chief Financial Officer
(principal financial officer)
* Vice President and Controller
Richard L. Yates (principal accounting officer)
*By:/s/ Michael D. Cahn
Michael D. Cahn
Attorney-in-fact
25
TEXTRON INC.
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Item 14(a)
Form Annual Report
Textron Inc. 10-K to Shareholders
Report of Independent Auditors 31
Consolidated Statement of Income for each of the 32
three years in the period ended December 28, 1996
Consolidated Balance Sheet at December 28, 1996 and 34
December 30, 1995
Consolidated Statement of Cash Flows for each of 36
the three years in the period ended December 28,
1996
Consolidated Statement of Changes in Shareholders' 38
Equity for each of the three years in the period
ended December 28, 1996
Notes to Consolidated Financial Statements 39-51
Revenues and Income by Business Segment 23
Supplementary Information (Unaudited):
Quarterly Financial Information 1996 and 1995 52
Financial Statement Schedules for each of the three
years in the period ended December 28, 1996
I Condensed financial information of 27
registrant
II Valuation and qualifying accounts 28
All other schedules are omitted because the conditions requiring
the filing thereof do not exist or because the information required
is included in the financial statements and notes thereto.
26
TEXTRON INC.
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
For each of the three years in the period ended December 28, 1996
Financial information of the Registrant is omitted because
condensed financial information of the Parent Group, which includes
the Registrant and all of its majority-owned subsidiaries other
than its finance subsidiaries (Finance Group), is shown on pages 32
through 37 of Textron's 1996 Annual Report to Shareholders.
Management believes that the disclosure of financial information on
the basis of the Parent Group results in a more meaningful
presentation, since this group constitutes the Registrant's basic
borrowing entity and the only restrictions on net assets of
Textron's subsidiaries relate to its Finance Group. The
Registrant's investment in its Finance Group is shown on pages 34
and 35 of Textron's 1996 Annual Report to Shareholders under the
caption "Investments in Finance Group."
The Parent Group received dividends of $124 million, $117
million and $106 million from its Finance Group in 1996, 1995 and
1994, respectively. The portion of the net assets of Textron's
Finance Group available for cash dividends and other payments to
the Parent Group is restricted by the terms of lending agreements
and insurance statutory requirements. As of December 28, 1996,
approximately $473 million of their net assets of $1.6 billion was
available to be transferred to the Parent Group pursuant to these
restrictions.
The Parent Group's credit agreements contain provisions
requiring it to maintain a minimum level of shareholders' equity
and a minimum interest coverage ratio. For additional information
concerning the Parent Group's long-term debt, see Note 9 to the
consolidated financial statements appearing on pages 43 and 44 of
Textron's 1996 Annual Report to Shareholders.
For information concerning Textron-obligated Mandatorily
Redeemable Preferred Securities of Subsidiary Trust Holding Solely
Textron Junior Subordinated Debt Securities, see Note 11 to the
consolidated financial statements appearing on page 45 of Textron's
1996 Annual Report to Shareholders.
27
TEXTRON INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For each of the three years in the period ended December 28, 1996
(In millions)
Allowance for credit losses
Changes in the allowance for credit losses for the years indicated
were as follows:
1996 1995 1994
Balance of the allowance for credit losses
at the beginning of the year $270 $250 $225
Add - charged to income:
Consumer 203 149 136
Commercial 27 20 26
230 169 162
Deduct - balances charged off:
Gross charge offs:
Consumer (230) (177) (142)
Commercial (30) (25) (27)
(260) (202) (169)
Recoveries:
Consumer 36 33 28
Commercial 3 4 3
39 37 31
Net charge offs (221) (165) (138)
Other 14 16 1
Balance of the allowance for credit losses
at the end of the year $293 $270 $250
Balance of the allowance for credit losses
at the end of the year applicable to:
Consumer $218 $195 $181
Commercial 75 75 69
$293 $270 $250
28
TEXTRON INC.
Index of Exhibits
Annual Report on Form 10-K
for the Fiscal Year Ended December 28, 1996
Exhibits Description
3.1A Restated Certificate of Incorporation of
Textron as filed March 24, 1988. Incorporated by
reference to Exhibit 3.1 to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 2, 1988.
3.1B Amendment to Certificate of Designations,
Preferences and Rights of Series C Junior
Participating Preferred Stock as filed March 20,
1996.
3.2 By-Laws of Textron, restated December 10,
1992. Incorporated by reference to Exhibit 3.2 to
Textron's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993.
NOTE: Exhibits 10.1 through 10.20 below are
management contracts or compensatory plans,
contracts or agreements.
10.1 Annual Incentive Compensation Plan For
Textron Employees. Incorporated by reference to
Exhibit 10.1 to Textron's Annual Report on Form 10-
K for the fiscal year ended December 30, 1995.
10.2 Deferred Income Plan For Textron Key
Executives. Incorporated by reference to Exhibit
10.2 to Textron's Annual Report on Form 10-K for
the fiscal year ended December 30, 1995.
10.3 Severance Plan For Textron Key Executives.
Incorporated by reference to Exhibit 10.3 to
Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995.
10.4 Special Benefits for Textron Key Executives.
Incorporated by reference to Exhibit 10.4 to
Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995.
10.5 Supplemental Benefits Plan For Textron Key
Executives with Market Square Profit Sharing Plan
Schedule. Incorporated by reference to Exhibit
10.5 to Textron's Annual Report on Form 10-K for
the fiscal year ended December 30, 1995.
10.6 Supplemental Retirement Plan For Textron Key
Executives. Incorporated by reference to Exhibit
10.6 to Textron's Annual Report on Form 10-K for
the fiscal year ended December 30, 1995.
10.7 Survivor Benefit Plan For Textron Key
Executives. Incorporated by reference to Exhibit
10.7 to Textron's Annual Report on Form 10-K for
the fiscal year ended December 30, 1995.
10.8A Textron 1982 Long-Term Incentive Plan ("1982
Plan"). Incorporated by reference to Exhibit
10.5(a) to Textron's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988.
10.8B First Amendment to 1982 Plan. Incorporated
by reference to Exhibit 10.5(b) to Textron's
Annual Report on Form 10-K for the fiscal year
ended January 3, 1987.
10.8C Second Amendment to 1982 Plan. Incorporated
by reference to Exhibit 10.5(c) to Textron's
Annual Report on Form 10-K for the fiscal year
ended January 2, 1988.
10.9A Textron 1987 Long-Term Incentive Plan ("1987
Plan"). Incorporated by reference to Exhibit 10.6
to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989.
10.9B First Amendment to 1987 Plan. Incorporated
by reference to Exhibit 10.6(b) to Textron's
Annual Report on Form 10-K for the fiscal year
ended December 28, 1991.
10.10A Textron 1990 Long-Term Incentive Plan ("1990
Plan"). Incorporated by reference to Exhibit 10.7
to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989.
10.10B First Amendment to 1990 Plan. Incorporated
by reference to Exhibit 10.7(c) to Textron's
Annual Report on Form 10-K for the fiscal year
ended December 28, 1991.
10.10C Second Amendment to 1990 Plan. Incorporated
by reference to Exhibit 10.7(c) to Textron's
Annual Report on Form 10-K for the fiscal year
ended January 2, 1993.
10.11 Textron 1994 Long-Term Incentive Plan.
Incorporated by reference to Exhibit 10 to
Textron's Quarterly Report on Form 10-Q for the
fiscal quarter ended July 2, 1994.
10.12 Form of Indemnity Agreement between Textron
and its directors and executive officers.
Incorporated by reference to Exhibit A to
Textron's Proxy Statement for its Annual Meeting
of Shareholders on April 29, 1987.
10.13A Pension Plan for Directors as amended by a
First Amendment (discontinued as of September 30,
1996). Incorporated by reference to Exhibit 10.14
to Textron's Annual Report on Form 10-K for the
fiscal year ended December 31, 1988.
10.13B Second Amendment to Pension Plan for
Directors (discontinued as of September 30, 1996).
Incorporated by reference to Exhibit 10.16(b) to
Textron's Annual Report on Form 10-K for the
fiscal year ended December 29, 1990.
10.14 Deferred Income Plan for Non-Employee
Directors.
10.15A Employment Agreement between Textron and
James F. Hardymon dated November 24, 1989
("Employment Agreement"). Incorporated by
reference to Exhibit 10.9 to Textron's Annual
Report on Form 10-K for the fiscal year ended
December 30, 1989.
10.15B Amendment dated as of December 15, 1994 to
Employment Agreement. Incorporated by reference
to Exhibit 10.10B to Textron's Annual Report on
Form 10-K for the fiscal year ended December 31,
1994.
10.16A Employment Agreement between Textron and Lewis B.
Campbell dated September 22, 1992. Incorporated
by reference to Exhibit 10.9 to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 2, 1993.
10.16B Retention Award granted to Lewis B. Campbell
on December 14, 1995. Incorporated by reference
to Exhibit 10.16B to Textron's Annual Report on
Form 10-K for the fiscal year ended December 30,
1995.
10.17 Employment Agreement between Textron and Mary
L. Howell dated May 4, 1993. Incorporated by
reference to Exhibit 10.11 to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 1, 1994.
10.18 Employment Agreement between Textron and
Wayne W. Juchatz dated November 1, 1995.
Incorporated by reference to Exhibit 10.18 to
Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995.
10.19 Employment Agreement between Textron and
Stephen L. Key dated November 1, 1995.
Incorporated by reference to Exhibit 10.19 to
Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995.
10.20 Employment Agreement between Textron and
William F. Wayland dated January 1, 1989.
Incorporated by reference to Exhibit 10.12 to
Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989.
10.21A Credit Agreement dated as of November 1, 1993
among Textron, the Lenders listed therein and
Bankers Trust Company as Administrative Agent
("Credit Agreement"). Incorporated by reference
to Exhibit 10.20A to Textron's Annual Report on
Form 10-K for the fiscal year ended January 1,
1994.
10.21B First Amendment dated as of October 30, 1994
to Credit Agreement. Incorporated by reference to
Exhibit 10.22B to Textron's Annual Report on Form
10-K for the fiscal year ended December 31, 1994.
10.21C Second Amendment to Credit Agreement dated as
of July 1, 1995. Incorporated by reference to
Exhibit (b) (3) to Schedule 14D-1 filed by Textron
on September 19, 1995.
10.21D Third Amendment to Credit Agreement dated as
of July 1, 1996.
12.1 Computation of ratio of income to combined
fixed charges and preferred stock dividends of the
Parent Group.
12.2 Computation of ratio of income to combined
fixed charges and preferred stock dividends of
Textron Inc. including all majority-owned
subsidiaries.
13 A portion (pages 23 and following) of
Textron's 1996 Annual Report to Shareholders.
Except for pages or items specifically
incorporated by reference herein, such portion of
Textron's 1996 Annual Report to Shareholders is
furnished for the information of the Commission
and is not filed as part of this Report.
21 Certain subsidiaries of Textron. Other
subsidiaries, which considered in the aggregate do
not constitute a significant subsidiary, are
omitted from such list.
23 Consent of Independent Auditors.
24.1 Power of attorney.
24.2 Certified copy of a resolution of the Board of
Directors of Textron.
27 Financial Data Schedule.