<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 25, 1996
REGISTRATION NO. 33-63227
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C> <C>
TEXTRON INC. DELAWARE 05-0315468
TEXTRON CAPITAL I DELAWARE 05-6110105
TEXTRON CAPITAL II DELAWARE 05-6110106
TEXTRON CAPITAL III DELAWARE 05-6110107
TEXTRON FINANCE, L.P. DELAWARE TO BE APPLIED FOR
(EXACT NAME OF REGISTRANT AS (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
SPECIFIED IN ITS CHARTER) INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
------------------------
40 WESTMINSTER STREET
PROVIDENCE, RHODE ISLAND 02903
(401) 421-2800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF EACH REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
MICHAEL D. CAHN
ASSISTANT GENERAL COUNSEL -- CORPORATE
AND ASSISTANT SECRETARY
TEXTRON INC.
40 WESTMINSTER STREET
PROVIDENCE, RHODE ISLAND 02903
(401) 421-2800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE FOR EACH REGISTRANT)
------------------------
COPIES TO:
LOUIS A. GOODMAN
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
ONE BEACON STREET
BOSTON, MA 02108
(617) 573-4800
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of the Registration Statement, as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, please check the
following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/
(Cover continued on next page.)
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
(Continued from previous page.)
<TABLE>
==========================================================================================================
PROPOSED
MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER UNIT (1)(2)(3) PRICE (1)(2)(3) FEE (2)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred Securities of Textron
Capital I.....................
Preferred Securities of Textron
Capital II....................
Preferred Securities of Textron
Capital III...................
Preferred Securities of Textron
Finance, L.P..................
Senior Debt Securities of
Textron Inc...................
Subordinated Debt Securities of
Textron Inc...................
Junior Subordinated Debt
Securities of Textron Inc.....
Guarantees of Preferred
Securities of Textron Capital
I, Textron Capital II and
Textron Capital III by Textron
Inc. (4)......................
Guarantee of Preferred
Securities of Textron Finance,
L.P. by Textron Inc. (4)......
- ----------------------------------------------------------------------------------------------------------
Total........................... $800,000,000 100% $800,000,000 $275,862.07
==========================================================================================================
<FN>
(1) Such indeterminate number of Preferred Securities of Textron Capital I,
Textron Capital II, Textron Capital III and Textron Finance, L.P. and such
indeterminate principal amount of Senior Debt Securities, Subordinated Debt
Securities or Junior Subordinated Debt Securities of Textron Inc. as may
from time to time be issued at indeterminate prices. Junior Subordinated
Debt Securities may be issued and sold to Textron Capital I, Textron Capital
II, Textron Capital III and Textron Finance, L.P., in which event such
Junior Subordinated Debt Securities may later be distributed to the holders
of Preferred Securities upon a dissolution of Textron Capital I, Textron
Capital II, Textron Capital III and Textron Finance, L.P. and the
distribution of the assets thereof.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. The aggregate public offering price of the Preferred
Securities of Textron Capital I, Textron Capital II, Textron Capital III and
Textron Finance, L.P. and the Senior Debt Securities, Subordinated Debt
Securities or Junior Subordinated Debt Securities of Textron Inc. registered
will not exceed $800,000,000.
(3) Exclusive of accrued interest and distributions, if any.
(4) Includes back-up undertakings, consisting of obligations by Textron Inc. to
provide certain indemnities in respect of, and pay and be responsible for
certain expenses, costs, liabilities, and debts of, as applicable, Textron
Capital I, Textron Capital II, Textron Capital III and Textron Finance,
L.P., as set forth in the Amended and Restated Declaration of Trust, the
Subordinated Indenture and Supplemental Indentures thereto, in each case as
further described in the Registration Statement. No separate consideration
will be received for any Guarantees or any back-up undertakings.
</TABLE>
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
prospectus included in this Registration Statement also relates to the remaining
unsold $210,985,000 principal amount of debt securities previously registered by
Textron Inc. under its Registration Statement on Form S-3 (File No. 33-46501).
EXPLANATORY NOTE: THIS AMENDMENT NO. 3 IS BEING FILED SOLELY FOR THE PURPOSE OF
FILING CERTAIN EXHIBITS.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the distribution of the securities being
registered (other than underwriting discounts and commissions) are estimated as
follows:
<TABLE>
<S> <C>
SEC Filing Fee........................................................ $ 275,862.07
Rating Agency Fees.................................................... 205,000.00
Blue Sky Fees and Expenses............................................ 45,000.00
New York Stock Exchange Listing Fee................................... 153,200.00
Trustee's Expenses.................................................... 10,000.00
Printing Fees and Expenses............................................ 150,000.00
Accounting Fees and Expenses.......................................... 125,000.00
Legal Fees and Expenses............................................... 200,000.00
Miscellaneous......................................................... 35,937.93
-------
Total....................................................... $1,200,000.00
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law and Article XII of
Textron's By-laws contain provisions for indemnification of directors and
officers in certain circumstances, which may include indemnity against expenses,
including attorneys' fees and judgments, fines and amounts paid in settlement
under the Securities Act of 1933.
Also, Textron has obtained policies of directors' and officers' liability
insurance and has entered into indemnification agreements which contain
additional provisions for indemnification of directors and officers in certain
circumstances.
In addition, the Underwriting Agreements filed as Exhibits 1(a) and (b) and
the Selling Agency Agreement filed as Exhibit 1(c) hereto provide for
indemnification by the Underwriters and Agents of Textron, its directors and
officers for certain liabilities arising under the Securities Act of 1933.
The Declaration of each Textron Trust provides that no Institutional
Trustee or any of its Affiliates, Delaware Trustee or any of its Affiliates, or
officer, director, shareholder, member, partner, employee, representative or
agent of the Institutional Trustee or the Delaware Trustee (each a "Fiduciary
Indemnified Person"), and no Regular Trustee, Affiliate of any Regular Trustee,
or any officer, director, shareholder, member, partner, employee, representative
or agent of any Regular Trustee, or any employee or agent of the Trust or its
Affiliates (each a "Company Indemnified Person") shall be liable, responsible or
accountable in damages or otherwise to such Textron Trust or any officer,
director, shareholder, partner, member, representative, employee or agent of the
Trust or its Affiliates for any loss, damage or claim incurred by reason of any
act or omission performed or omitted by such Fiduciary Indemnified Person or
Company Indemnified Person in good faith on behalf of such Textron Trust and in
a manner such Fiduciary Indemnified Person or Company Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Fiduciary Indemnified Person or Company Indemnified Person by such Declaration
or by law, except that a Fiduciary Indemnified Person or Company Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of
such Fiduciary Indemnified Person's or Company Indemnified Person's gross
negligence (or, in the case of a Fiduciary Indemnified Person, negligence) or
willful misconduct with respect to such acts or omissions. The Declaration of
each Textron Trust also provides that to the full extent permitted by law,
Textron shall indemnify any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees), judgments, fines and
II-1
<PAGE> 4
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The Declaration of each Textron Trust
also provides that to the full extent permitted by law, Textron shall indemnify
any Company Indemnified Person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Trust to procure a judgment in its favor by reason of the fact that
he is or was a Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust
and except that no such indemnification shall be made in respect of any claim,
issue or matter as to which such Company Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent that the Court
of Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper. The Declaration of each Textron Trust
further provides that expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in the immediately
preceding two sentences shall be paid by Textron in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by Textron as
authorized in the Declaration. The directors and officers of Textron and the
Regular Trustees are covered by insurance policies indemnifying them against
certain liabilities, including certain liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), which might be incurred by them
in such capacities and against which they cannot be indemnified by Textron or
the Textron Trusts. Any agents, dealers or underwriters who execute any of the
agreements filed as Exhibit 1 to this Registration Statement will agree to
indemnify Textron's directors and their officers and the Textron Trustees who
signed the Registration Statement against certain liabilities that may arise
under the Securities Act with respect to information furnished to Textron or any
of the Textron Trusts by or on behalf of any such indemnifying party.
The Limited Partnership Agreement of Textron Partnership provides that, to
the full extent permitted by law, Textron Partnership shall indemnify each of
the General Partner, any Special Representative, any Affiliate of the General
Partner or any Special Representative, any officers, directors, shareholders,
members, partners, employees, representatives or agents of the General Partner
or any Special Representative, or any employee or agent of Textron Partnership
or its Affiliates (each a "Partnership Indemnified Person") who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of Textron Partnership)
by reason of the fact that he is or was a Partnership Indemnified Person against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of Textron
Partnership, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Limited Partnership
Agreement also provides that Textron Partnership shall indemnify, to the full
extent permitted by law, any Partnership Indemnified Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of Textron Partnership to procure a
judgment in its favor by reason of the fact that he is or was a Partnership
Indemnified Person against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of Textron Partnership and except
that no such indemnification shall be made in respect of any claim, issue or
matter as to which such Partnership Indemnified Person shall have been adjudged
to be liable to Textron Partnership unless and only to the extent that the Court
of Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
II-2
<PAGE> 5
reasonably entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper. The Limited Partnership Agreement also
provides that expenses (including attorneys' fees) incurred by a Partnership
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in the immediately
preceding two sentences shall be paid by Textron Partnership in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Partnership Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by Textron Partnership as authorized in the Limited Partnership
Agreement. The Limited Partnership Agreement further provides that no
Partnership Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to Textron Partnership or any Covered Person (as defined
therein) for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Partnership Indemnified Person in good faith on
behalf of Textron Partnership and in a manner such Partnership Indemnified
Person reasonably believed to be within the scope of the authority conferred on
such Partnership Indemnified Person by the Limited Partnership Agreement or by
law, except that a Partnership Indemnified Person shall be liable for any such
loss, damage or claim incurred by reason of such Partnership Indemnified
Person's gross negligence or willful misconduct with respect to such acts or
omissions.
II-3
<PAGE> 6
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
***1(a) Form of Underwriting Agreement for offering of Preferred Securities.
*1(b) Form of Underwriting Agreement for offering of Debt Securities.
*1(c) Form of Selling Agency Agreement, incorporated by reference to Exhibits to
Registration Statement No. 33-46501.
*4(a) Certificate of Trust of Textron Capital I.
*4(b) Certificate of Trust of Textron Capital II.
*4(c) Certificate of Trust of Textron Capital III.
*4(d) Form of Amended and Restated Declaration of Trust.
*4(e) Certificate of Limited Partnership of Textron Finance, L.P.
*4(f) Form of Amended and Restated Agreement of Limited Partnership of Textron Finance,
L.P.
*4(g) Senior Indenture between Textron Inc. and Chemical Bank (as successor to
Manufacturers Hanover Trust Company), as Trustee, incorporated by reference to
Exhibits to Registration Statement No. 33-13742.
*4(h) First Supplemental Senior Indenture between Textron Inc. and Chemical Bank (as
successor to Manufacturers Hanover Trust Company), as Trustee, incorporated by
reference to Exhibits to Registration Statement No. 33-20657.
*4(i) Form of Second Supplemental Senior Indenture to be used in connection with the
issuance of Senior Debt Securities.
*4(j) Subordinated Indenture between Textron Inc. and The Chase Manhattan Bank, N.A.,
as Trustee, incorporated by reference to Exhibits to Registration Statement No.
33-1787.
*4(k) First Supplemental Subordinated Indenture between Textron Inc. and The Chase
Manhattan Bank, N.A., incorporated by reference to Exhibits to Registration
Statement No. 33-9758.
*4(l) Form of Second Supplemental Subordinated Indenture to be used in connection with
the issuance of Subordinated Debt Securities.
*4(m) Form of Junior Subordinated Indenture between Textron Inc. and The Chase
Manhattan Bank, N.A., as Trustee, relating to the Junior Subordinated Debt
Securities.
*4(n) Form of First Supplemental Junior Subordinated Indenture to be used in connection
with the issuance of Junior Subordinated Debt Securities and Preferred
Securities.
*4(o) Form of Trust Preferred Security (included in 4(d) above).
*4(p) Form of Partnership Preferred Security (included in 4(f) above).
*4(q) Form of Senior Debt Security (included in 4(g) above).
*4(r) Form of Subordinated Debt Security (included in 4(j) above).
*4(s) Form of Junior Subordinated Debt Security (included in 4(n) above).
*4(t) Form of Trust Guarantee relating to the Trust Preferred Securities.
*4(u) Form of Partnership Guarantee relating to the Partnership Preferred Securities.
*5(a) Opinion and consent of Michael D. Cahn, Assistant General Counsel -- Corporate of
Textron Inc.
*5(b) Opinion of Skadden, Arps, Slate, Meagher & Flom.
*12(a) Computation of Ratio of Income to Fixed Charges of Textron Parent Company
Borrowing Group, incorporated by reference to Exhibits to Form 10-Q of Textron
Inc. for the quarter ended September 30, 1995 and Form 10-K of Textron Inc. for
the year ended December 31, 1994.
</TABLE>
II-4
<PAGE> 7
<TABLE>
<C> <S>
*12(b) Computation of Ratio of Income to Fixed Charges for Textron Inc. Including All
Majority- Owned Subsidiaries, incorporated by reference to Exhibits to Form 10-Q
of Textron Inc. for the quarter ended September 30, 1995 and Form 10-K of Textron
Inc. for the year ended December 31, 1994.
**23(a) Consent of Independent Auditors, Ernst & Young LLP.
*23(b) Consent of Skadden, Arps, Slate, Meagher & Flom is contained in the opinion of
counsel filed as Exhibit 5(b).
*24(a) Powers of Attorney.
*24(b) Certified Resolutions of the Board of Directors of Textron Inc.
*25(a) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
Chemical Bank, as Trustee under the Senior Indenture, incorporated by reference
to Exhibits to Registration Statement No. 33-46501.
*25(b) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Chase Manhattan Bank, N.A., as Trustee under the Subordinated Indenture,
incorporated by reference to Exhibits to Registration Statement No. 33-46501.
*25(c) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Chase Manhattan Bank, N.A., as Trustee under the Junior Subordinated
Indenture and as Trustee of the Trust Guarantees of Textron Inc. for the benefit
of the holders of Trust Preferred Securities of Textron Capital I, Textron
Capital II and Textron Capital III.
*25(d) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Chase Manhattan Bank, N.A., as Trustee under the Amended and Restated
Declaration of Trust of Textron Capital I.
*25(e) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Chase Manhattan Bank, N.A., as Trustee under the Amended and Restated
Declaration of Trust of Textron Capital II.
*25(f) Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Chase Manhattan Bank, N.A., as Trustee under the Amended and Restated
Declaration of Trust of Textron Capital III.
**99 Form of Prospectus Supplement for Trust Preferred Securities.
<FN>
- ---------------
* Filed previously.
** Filed herewith.
*** To be filed subsequent to effectiveness.
</TABLE>
ITEM 17. UNDERTAKINGS.
The Registrants hereby undertake that, for purposes of determining any
liability under the Securities Act, each filing of Textron's Annual Report on
Form 10-K pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (and where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions referred to in Item 15 (other than the
insurance policies referred to therein), or otherwise, the Registrants have been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities
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<PAGE> 8
(other than the payment by the Registrants of expenses incurred or paid by a
director, officer or controlling person of the Registrants in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement
i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) that, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
iii) to include any material information with respect to the Plan of
Distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by Textron pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of a registration
statement in reliance upon Rule 430A and contained in the form of prospectus
filed by the registrant pursuant to Rule 424 (b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of the registration statement as of
the time it was declared effective.
(2) For the purposes of determining any liability under the Securities Act,
each posteffective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
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<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Textron Inc.
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 3 to
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Providence, and State of Rhode Island,
on this 25th day of January, 1996.
TEXTRON INC.
By: /s/ MICHAEL D. CAHN
------------------------------------
Michael D. Cahn
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to Registration Statement has been signed below on this 25th day of
January, 1996 by the following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Chairman, Chief Executive
- --------------------------------------------- Officer and Director (principal
James F. Hardymon executive officer)
* President, Chief Operating
- --------------------------------------------- Officer and Director
Lewis B. Campbell
* Director
- ---------------------------------------------
H. Jesse Arnelle
* Director
- ---------------------------------------------
R. Stuart Dickson
* Director
- ---------------------------------------------
B. F. Dolan
Director
- ---------------------------------------------
Paul E. Gagne
* Director
- ---------------------------------------------
John D. Macomber
* Director
- ---------------------------------------------
Barbara Scott Preiskel
Director
- ---------------------------------------------
Brian H. Rowe
* Director
- ---------------------------------------------
Sam F. Segnar
</TABLE>
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<PAGE> 10
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Director
- ---------------------------------------------
Jean Head Sisco
* Director
- ---------------------------------------------
John W. Snow
* Director
- ---------------------------------------------
Martin D. Walker
* Director
- ---------------------------------------------
Thomas B. Wheeler
* Executive Vice President and
- --------------------------------------------- Chief Financial Officer
Stephen L. Key (principal financial officer)
* Vice President and Controller
- --------------------------------------------- (principal accounting officer)
Richard L. Yates
*By: /s/ MICHAEL D. CAHN
- ---------------------------------------------
Michael D. Cahn
Attorney-in-fact
</TABLE>
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<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each of Textron
Capital I, Textron Capital II and Textron Capital III certifies that it has
reasonable grounds to believe that it meets all the requirements for filing on
Form S-3 and has duly caused this Amendment No. 3 to this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Providence, and State of Rhode Island, on this 25th day of January,
1996.
TEXTRON CAPITAL I
By: /s/ RICHARD A. WATSON
--------------------------------------
Richard A. Watson, as Trustee
By: /s/ GREGORY E. HUDSON
--------------------------------------
Gregory E. Hudson, as Trustee
TEXTRON CAPITAL II
By: /s/ RICHARD A. WATSON
--------------------------------------
Richard A. Watson, as Trustee
By: /s/ GREGORY E. HUDSON
--------------------------------------
Gregory E. Hudson, as Trustee
TEXTRON CAPITAL III
By: /s/ RICHARD A. WATSON
--------------------------------------
Richard A. Watson, as Trustee
By: /s/ GREGORY E. HUDSON
--------------------------------------
Gregory E. Hudson, as Trustee
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<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Textron Finance, L.P. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 3 to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Providence, and State of
Rhode Island, on this 25th day of January, 1996.
TEXTRON FINANCE, L.P.
By: TEXTRON INC.
General Partner
/s/ ARNOLD M. FRIEDMAN
By:
--------------------------------------
Name: Arnold M. Friedman
Title: Vice President and
Deputy General Counsel
II-10
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ------------ ----------- ----
<C> <S> <C>
***1 (a) Form of Underwriting Agreement for offering of Preferred Securities.
*1 (b) Form of Underwriting Agreement for offering of Debt Securities.
*1 (c) Form of Selling Agency Agreement, incorporated by reference to Exhibits to
Registration Statement No. 33-46501.
*4 (a) Certificate of Trust of Textron Capital I.
*4 (b) Certificate of Trust of Textron Capital II.
*4 (c) Certificate of Trust of Textron Capital III.
*4 (d) Form of Amended and Restated Declaration of Trust.
*4 (e) Certificate of Limited Partnership of Textron Finance, L.P.
*4 (f) Form of Amended and Restated Agreement of Limited Partnership of Textron
Finance, L.P.
*4 (g) Senior Indenture between Textron Inc. and Chemical Bank (as successor to
Manufacturers Hanover Trust Company), as Trustee, incorporated by reference
to Exhibits to Registration Statement No. 33-13742.
*4 (h) First Supplemental Senior Indenture between Textron Inc. and Chemical Bank
(as successor to Manufacturers Hanover Trust Company), as Trustee,
incorporated by reference to Exhibits to Registration Statement No.
33-20657.
*4 (i) Form of Second Supplemental Senior Indenture to be used in connection with
the issuance of Senior Debt Securities.
*4 (j) Subordinated Indenture between Textron Inc. and The Chase Manhattan Bank,
N.A., as Trustee, incorporated by reference to Exhibits to Registration
Statement No. 33-1787.
*4 (k) First Supplemental Subordinated Indenture between Textron Inc. and The
Chase Manhattan Bank, N.A., incorporated by reference to Exhibits to
Registration Statement No. 33-9758.
*4 (l) Form of Second Supplemental Subordinated Indenture to be used in connection
with the issuance of Subordinated Debt Securities.
*4 (m) Form of Junior Subordinated Indenture between Textron Inc. and The Chase
Manhattan Bank, N.A., as Trustee, relating to the Junior Subordinated Debt
Securities.
*4 (n) Form of First Supplemental Junior Subordinated Indenture to be used in
connection with the issuance of Junior Subordinated Debt Securities and
Preferred Securities.
*4 (o) Form of Trust Preferred Security (included in 4(d) above).
*4 (p) Form of Partnership Preferred Security (included in 4(f) above).
*4 (q) Form of Senior Debt Security (included in 4(g) above).
*4 (r) Form of Subordinated Debt Security (included in 4(j) above).
*4 (s) Form of Junior Subordinated Debt Security (included in 4(n) above).
*4 (t) Form of Trust Guarantee relating to the Trust Preferred Securities.
*4 (u) Form of Partnership Guarantee relating to the Partnership Preferred
Securities.
*5 (a) Opinion and consent of Michael D. Cahn, Assistant General
Counsel -- Corporate of Textron Inc.
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
<C> <S> <C>
*5 (b) Opinion of Skadden, Arps, Slate, Meagher & Flom.
*12 (a) Computation of Ratio of Income to Fixed Charges of Textron Parent Company
Borrowing Group, incorporated by reference to Exhibits to Form 10-Q of
Textron Inc. for the quarter ended September 30, 1995 and Form 10-K of
Textron Inc. for the year ended December 31, 1994.
*12 (b) Computation of Ratio of Income to Fixed Charges for Textron Inc. Including
All Majority-Owned Subsidiaries, incorporated by reference to Exhibits to
Form 10-Q of Textron Inc. for the quarter ended September 30, 1995 and Form
10-K of Textron Inc. for the year ended December 31, 1994.
**23 (a) Consent of Independent Auditors, Ernst & Young LLP.
*23 (b) Consent of Skadden, Arps, Slate, Meagher & Flom is contained in the opinion
of counsel filed as Exhibit 5(b).
*24 (a) Powers of Attorney.
*24 (b) Certified Resolutions of the Board of Directors of Textron, Inc.
*25 (a) Statement of Eligibility under the Trust Indenture Act of 1939, as amended,
of Chemical Bank, as Trustee under the Senior Indenture, incorporated by
reference to Exhibits to Registration Statement No. 33-46501.
*25 (b) Statement of Eligibility under the Trust Indenture Act of 1939, as amended,
of The Chase Manhattan Bank, N.A., as Trustee under the Subordinated
Indenture, incorporated by reference to Exhibits to Registration Statement
No. 33-46501.
*25 (c) Statement of Eligibility under the Trust Indenture Act of 1939, as amended,
of The Chase Manhattan Bank, N.A., as Trustee under the Junior Subordinated
Indenture and as Trustee of the Trust Guarantees of Textron Inc. for the
benefit of the holders of Trust Preferred Securities of Textron Capital I,
Textron Capital II and Textron Capital III.
*25 (d) Statement of Eligibility under the Trust Indenture Act of 1939, as amended,
of The Chase Manhattan Bank, N.A., as Trustee under the Amended and
Restated Declaration of Trust of Textron Capital I.
*25 (e) Statement of Eligibility under the Trust Indenture Act of 1939, as amended,
of The Chase Manhattan Bank, N.A., as Trustee under the Amended and
Restated Declaration of Trust of Textron Capital II.
*25 (f) Statement of Eligibility under the Trust Indenture Act of 1939, as amended,
of The Chase Manhattan Bank, N.A., as Trustee under the Amended and
Restated Declaration of Trust of Textron Capital III.
**99
Form of Prospectus Supplement for Trust Preferred Securities.
<FN>
- ---------------
* Filed previously.
** Filed herewith.
*** To be filed subsequent to effectiveness.
</TABLE>
<PAGE> 1
Exhibit 23(a)
CONSENT OF INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Experts" and
"Summary Financial Data" in Amendment No. 3 to the Registration Statement (Form
S-3 No. 33-63227) and related Prospectus and Prospectus Supplement of Textron
Inc. for the registration of Senior Debt Securities, Subordinated Debt
Securities and Junior Subordinated Debt Securities of Textron Inc. and Preferred
Securities of Textron Capital I, II and III and Textron Finance, L.P. and to the
incorporation by reference therein of our report dated February 2, 1995 with
respect to the consolidated financial statements of Textron Inc. incorporated by
reference in its Annual Report (Form 10-K) for the year ended December 31, 1994
and our report dated March 24, 1995 on the financial statement schedules of
Textron Inc. included therein filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
New York, New York
January 23, 1996
<PAGE> 1
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
EXHIBIT 99
FORM OF PROSPECTUS SUPPLEMENT FOR TRUST PREFERRED SECURITIES
SUBJECT TO COMPLETION, DATED , 1996
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1996)
PREFERRED SECURITIES
TEXTRON CAPITAL I [LOGO TEXTRON]
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
TEXTRON INC.
------------------
The % Trust Preferred Securities (the "Preferred Securities") offered
hereby represent preferred undivided beneficial interests in the assets of
Textron Capital I, a statutory business trust formed under the laws of the State
of Delaware ("Textron Capital" or the "Trust"). Textron Inc., a Delaware
corporation ("Textron" and, together with its subsidiaries, the "Company"), will
directly or indirectly own all the common securities (the "Common Securities"
and, together with the Preferred Securities, the "Trust Securities")
representing undivided beneficial interests in the assets of Textron Capital.
Textron Capital exists for the sole purpose of issuing the Preferred Securities
and Common Securities and investing the proceeds thereof in an equivalent amount
of % Junior Subordinated Deferrable Interest Debentures due 2044 (the
"Junior Subordinated Debt Securities") of Textron.
(continued on next page)
SEE "RISK FACTORS" ON PAGE S-6 FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE PERIOD AND CIRCUMSTANCES
DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED SECURITIES MAY
BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF
SUCH DEFERRAL.
Application has been made to list the Preferred Securities on the New York
Stock Exchange, Inc. (the "New York Stock Exchange"). If so approved, trading of
the Preferred Securities on the New York Stock Exchange is expected to commence
within a 30-day period after the initial delivery of the Preferred Securities.
See "Underwriting."
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO
WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=========================================================================================================
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) COMMISSION(2) TRUST(3)(4)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Preferred Security............................... $ (3) $
- ---------------------------------------------------------------------------------------------------------
Total................................................ $ (3) $
=========================================================================================================
<FN>
(1) Plus accrued distributions, if any, from , 1996.
(2) Textron Capital and Textron have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Junior Subordinated Debt Securities,
Textron has agreed to pay to the Underwriters as compensation
("Underwriters' Compensation") for their arranging the investment therein
of such proceeds $ per Preferred Security (or $ in the
aggregate); provided, that such compensation for sales of 10,000 or more
Preferred Securities to a single purchaser will be $ per
Preferred Security. Therefore, to the extent of such sales, the actual
amount of Underwriters' Compensation will be less than the aggregate
amount specified in the preceding sentence. See "Underwriting."
(4) Expenses of the offering which are payable by Textron are estimated to be
$ .
</TABLE>
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Preferred Securities will be made only in book-entry form
through the facilities of The Depository Trust Company, on or about
, 1996.
------------------
SMITH BARNEY INC.
------------------
The date of this Prospectus Supplement is , 1996.
<PAGE> 2
(continued from previous page)
Upon an event of a default under the Declaration (as defined herein), the
holders of Preferred Securities will have a preference over the holders of the
Common Securities with respect to payments in respect of distributions and
payments upon redemption, liquidation and otherwise.
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on , , and
of each year, commencing , 1996 ("distributions").
The payment of distributions out of moneys held by Textron Capital and payments
on liquidation of Textron Capital or the redemption of Preferred Securities, as
set forth below, are guaranteed by Textron (the "Guarantee") to the extent
described under "Description of Trust Guarantees" in the accompanying
Prospectus. The Guarantee covers payments of distributions and other payments on
the Preferred Securities only if and to the extent that Textron has made a
payment of interest or principal or other payments on the Junior Subordinated
Debt Securities held by Textron Capital as its sole asset. The Guarantee, when
taken together with Textron's obligations under the indenture pursuant to which
the Junior Subordinated Debt Securities are issued and its obligations under the
Declaration (as defined below), including its liabilities to pay costs,
expenses, debts and liabilities of Textron Capital (other than with respect to
the Trust Securities), provide a full and unconditional guarantee of amounts due
on the Preferred Securities. The obligations of Textron under the Guarantee rank
(i) subordinate and junior in right of payment to all other liabilities of
Textron, (ii) pari passu with the most senior preferred or preference stock now
or hereafter issued by Textron and with any guarantee now or hereafter entered
into by Textron in respect of any preferred or preference stock of any affiliate
of Textron and (iii) senior to Textron's common stock. The obligations of
Textron under the Junior Subordinated Debt Securities are subordinate and junior
in right of payment to all present and future Senior Indebtedness (as defined
herein) of Textron, which aggregated approximately $ at
, 1995, and rank pari passu with obligations to or rights of
Textron's other general unsecured creditors, which aggregated approximately
$ at , 1995.
The distribution rate and the distribution payment date and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment dates and other payment dates on the Junior Subordinated Debt
Securities, which will be the sole assets of Textron Capital. As a result, if
principal or interest is not paid on the Junior Subordinated Debt Securities, no
amounts will be paid on the Preferred Securities. If Textron does not make
principal or interest payments on the Junior Subordinated Debt Securities,
Textron Capital will not have sufficient funds to make distributions on the
Preferred Securities, in which event, the Guarantee will not apply to such
distributions until Textron Capital has sufficient funds available therefor.
Textron has the right to defer payments of interest on the Junior
Subordinated Debt Securities by extending the interest payment period on the
Junior Subordinated Debt Securities at any time for up to 20 consecutive
quarters (each, an "Extension Period"). If interest payments are so deferred,
distributions will also be deferred. During such Extension Period, distributions
will continue to accrue with interest thereon (to the extent permitted by
applicable law) at an annual rate of % per annum compounded quarterly, and
during any Extension Period, holders of Preferred Securities will be required to
include deferred interest income in their gross income for United States federal
income tax purposes in advance of receipt of the cash distributions with respect
to such deferred interest payments. There could be multiple Extension Periods of
varying lengths throughout the term of the Junior Subordinated Debt Securities.
See "Description of the Junior Subordinated Debt Securities -- Option to Extend
Interest Payment Period," "Risk Factors -- Option to Extend Interest Payment
Period and Defer Payment of Interest" and "United States Federal Income
Taxation -- Original Issue Discount."
The Junior Subordinated Debt Securities are redeemable by Textron, in whole
or in part, from time to time, on or after , , or at any
time in certain circumstances upon the occurrence of a Tax Event (as defined
herein). If Textron redeems Junior Subordinated Debt Securities, Textron Capital
must redeem Trust Securities having an aggregate liquidation amount equal to the
aggregate principal amount of
S-2
<PAGE> 3
the Junior Subordinated Debt Securities so redeemed at $25 per Preferred
Security plus accrued and unpaid distributions thereon (the "Redemption Price")
to the date fixed for redemption. See "Description of the Preferred
Securities -- Mandatory Redemption of Trust Securities." The Preferred
Securities will be redeemed upon maturity of the Junior Subordinated Debt
Securities. The Junior Subordinated Debt Securities mature on ,
. In addition, upon the occurrence of a Special Event arising from a change
in law or a change in legal interpretation regarding tax or investment company
matters, unless the Junior Subordinated Debt Securities are redeemed in the
limited circumstances described herein, Textron Capital shall be dissolved, with
the result that the Junior Subordinated Debt Securities will be distributed to
the holders of the Preferred Securities, on a pro rata basis, in lieu of any
cash distribution. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution." In certain circumstances, Textron will have the
right to redeem the Junior Subordinated Debt Securities, which would result in
the redemption by Textron Capital of Trust Securities in the same amount on a
PRO RATA basis. If the Junior Subordinated Debt Securities are distributed to
the holders of the Preferred Securities, Textron will use its best efforts to
have the Junior Subordinated Debt Securities listed on the New York Stock
Exchange or on such other exchange as the Preferred Securities are then listed.
See "Description of the Preferred Securities -- Special Event Redemption or
Distribution" and "Description of the Junior Subordinated Debt Securities."
In the event of the involuntary or voluntary dissolution, winding up or
termination of Textron Capital, the holders of the Preferred Securities will be
entitled to receive for each Preferred Security a liquidation amount of $25 plus
accrued and unpaid distributions thereon (including interest thereon) to the
date of payment, unless, in connection with such dissolution, the Junior
Subordinated Debt Securities are distributed to the holders of the Preferred
Securities. See "Description of the Preferred Securities -- Liquidation
Distribution Upon Dissolution."
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-3
<PAGE> 4
THE COMPANY
Textron, together with its subsidiaries, is a global, multi-industry
company with operations in six business segments: Aircraft, Automotive,
Industrial, Systems and Components, Finance and Paul Revere insurance. The
Company's products and services include Bell helicopters, Cessna aircraft,
Speidel watchbands, Avco Financial Services, E-Z-GO golf cars, Jacobsen lawn and
turf care equipment and disability insurance provided by The Paul Revere
Corporation.
The Aircraft segment consists of Bell Helicopter ("Bell") and Cessna
Aircraft ("Cessna"). Bell is the world's leader in commercial helicopter
production, both in number and dollar value of units sold. Cessna is the world's
largest designer and manufacturer of light and mid-sized business jets and
single-engine utility turboprop aircraft.
Textron Automotive Company supplies products primarily to automotive
original equipment manufacturers. A full-service global supplier of instrument
panels, exteriors, interiors, lighting and various functional components, the
Company is the leading independent supplier of interior trim components and a
major supplier of exterior trim components for cars and trucks made in North
America.
The Industrial segment is comprised of three major business groups:
fastening systems, golf, lawn and turf care equipment and diversified products.
The divisions of the Industrial segment sell products to the industrial and
consumer markets under a number of worldwide brand names, including E-Z-GO,
Jacobsen and Speidel.
The divisions of the Systems and Components segment manufacture various
products and components primarily for the commercial aerospace and defense
industries. These products include aircraft structures and controls, smart
weapons, amphibious vehicles, advanced materials and a variety of related
components.
The Company's Finance segment consists of Avco Financial Services ("AFS")
and Textron Financial Corporation ("TFC"). AFS is a multinational consumer
finance company with nearly 1,200 offices serving 1.8 million customers in seven
countries. TFC is a diversified commercial finance company that finances the
sale of Company and third-party products.
The Paul Revere Corporation ("Paul Revere") is the leading provider of
individual non-cancellable disability insurance in North America. Paul Revere
also provides group disability, life and annuity products. Paul Revere is 83
percent owned by Textron and 17 percent publicly owned and traded on the New
York Stock Exchange, Inc. ("PRL").
Textron's corporate office is located at 40 Westminster Street, Providence,
Rhode Island 02903; its telephone number is (401) 421-2800.
S-4
<PAGE> 5
TEXTRON CAPITAL I
Textron Capital is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of October 3, 1995, executed by
Textron, as sponsor (the "Sponsor"), and the trustees of Textron Capital (the
"Textron Trustees") and (ii) the filing of a certificate of trust with the
Secretary of State of the State of Delaware on October 4, 1995. Such declaration
will be amended and restated in its entirety (as so amended and restated, the
"Declaration") substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
form a part. The Declaration will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Upon issuance of
the Preferred Securities, the purchasers thereof will own all of the Preferred
Securities. See "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company." Textron will directly or indirectly
acquire Common Securities in an aggregate liquidation amount equal to 3% of the
total capital of Textron Capital. Textron Capital exists for the exclusive
purposes of (i) issuing the Trust Securities representing undivided beneficial
interests in the assets of the Trust, (ii) investing the gross proceeds of the
Trust Securities in the Junior Subordinated Debt Securities and (iii) engaging
in only those other activities necessary or incidental thereto.
Pursuant to the Declaration, the number of Textron Trustees will initially
be three. Two of the Textron Trustees (the "Regular Trustees") will be persons
who are employees or officers of, or who are affiliated with, Textron.
Initially, the Regular Trustees will be Richard A. Watson, Senior Vice President
and Treasurer, and Gregory E. Hudson, Vice President-Taxes, of Textron. The
third trustee will be a financial institution that maintains its principal place
of business in the State of Delaware and is unaffiliated with Textron, which
trustee will serve as property trustee under the Declaration and as indenture
trustee for the purposes of compliance with the provisions of the Trust
Indenture Act (the "Institutional Trustee"). Initially, The Chase Manhattan
Bank, N.A., a national banking association, will be the Institutional Trustee
until removed or replaced by the holder of the Common Securities. The Chase
Manhattan Bank, N.A., will also act as indenture trustee under the Guarantee for
the purposes of compliance with the provisions of the Trust Indenture Act (the
"Guarantee Trustee"). See "Description of Trust Guarantees" in the accompanying
Prospectus.
The Institutional Trustee will hold title to the Junior Subordinated Debt
Securities for the benefit of the holders of the Trust Securities and, in its
capacity as the holder, the Institutional Trustee will have the power to
exercise all rights, powers and privileges under the indenture pursuant to which
the Junior Subordinated Debt Securities are issued. In addition, the
Institutional Trustee will maintain exclusive control of a segregated
non-interest bearing bank account (the "Property Account") to hold all payments
made in respect of the Junior Subordinated Debt Securities for the benefit of
the holders of the Trust Securities. The Institutional Trustee will make
payments of distributions and payments on liquidation, redemption and otherwise
to the holders of the Trust Securities out of funds from the Property Account.
The Guarantee Trustee will hold the Guarantee for the benefit of the holders of
the Preferred Securities. Textron, as the direct or indirect holder of all the
Common Securities, will have the right to appoint, remove or replace any Textron
Trustee and to increase or decrease the number of Textron Trustees; PROVIDED,
that (i) the number of Textron Trustees shall be at least two and (ii) at least
one shall be a Regular Trustee. Textron will pay all fees and expenses related
to Textron Capital and the offering of the Trust Securities. See "Description of
the Junior Subordinated Debt Securities -- Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
S-5
<PAGE> 6
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should particularly consider the following matters.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE AND JUNIOR SUBORDINATED
DEBT SECURITIES
Textron's obligations under the Guarantee rank (i) subordinate and junior
in right of payment to all other liabilities of Textron, (ii) pari passu with
the most senior preferred or preference stock now or hereafter issued by Textron
and with any guarantee now or hereafter entered into by Textron in respect of
any preferred or preference stock of any affiliate of Textron and (iii) senior
to Textron's common stock. The obligations of Textron under the Junior
Subordinated Debt Securities are subordinate and junior in right of payment to
all present and future Senior Indebtedness of Textron and pari passu with
obligations to or rights of Textron's other general unsecured creditors. No
payment of principal (including redemption payments, if any), premium, if any,
or interest on the Junior Subordinated Debt Securities may be made if (i) any
Senior Indebtedness of Textron is not paid when due and any applicable grace
period with respect to such default has ended with such default not having been
cured or waived or ceasing to exist, or (ii) the maturity of any Senior
Indebtedness has been accelerated because of a default. As of ,
1995, Senior Indebtedness aggregated approximately $ . There are no
terms in the Preferred Securities, the Junior Subordinated Debt Securities or
the Guarantee that limit Textron's ability to incur additional indebtedness,
including indebtedness that ranks senior to the Junior Subordinated Debt
Securities and the Guarantee. See "Description of Trust Guarantees -- Status of
the Trust Guarantees" and "Particular Terms of the Junior Subordinated Debt
Securities" in the accompanying Prospectus, and "Description of the Junior
Subordinated Debt Securities -- Subordination" herein.
STRUCTURAL SUBORDINATION
The Junior Subordinated Debt Securities will be obligations of Textron
exclusively. Since a significant part of Textron's operations are conducted
through subsidiaries, a significant portion of Textron's cash flow and,
consequently, its ability to service debt, including the Junior Subordinated
Debt Securities, is dependent upon the earnings of its subsidiaries and the
transfer of funds by those subsidiaries to Textron in the form of dividends or
other transfers, supplemented with borrowings. Financing for Textron is
conducted through two separate borrowing groups: the Textron Parent Company
Borrowing Group and Textron's finance and insurance subsidiaries. See
"Capitalization of Textron Parent Company Borrowing Group." The amount of the
net assets of Textron's finance and insurance subsidiaries available for cash
dividends and other payments to the Textron Parent Company Borrowing Group is
restricted by the terms of lending agreements and statutory requirements
applicable to insurance companies. See "Capitalization of Textron Parent Company
Borrowing Group."
In addition, creditors of Textron's subsidiaries would be entitled to a
claim on the assets of such subsidiaries prior to any claims by Textron.
Consequently, in the event of a liquidation or reorganization of any subsidiary,
creditors of the subsidiary are likely to be paid in full before any
distribution is made to Textron, except to the extent that Textron itself is
recognized as a creditor of such subsidiary, in which case the claims of Textron
would still be subordinate to any security interest in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by
Textron. As of , 1995, the subsidiaries of the Textron Parent
Company Borrowing Group and Textron's finance and insurance subsidiaries had an
aggregate of $ million of outstanding indebtedness and other obligations,
of which $ was secured. See "Textron Inc. Summary Financial Data."
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. The Institutional Trustee will act as indenture trustee under the Guarantee
for the purposes of compliance with the provisions of the
S-6
<PAGE> 7
Trust Indenture Act. The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Preferred Securities.
The Guarantee guarantees to the holders of the Preferred Securities the
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Preferred Securities, to the extent Textron Capital has funds available
therefor, (ii) the Redemption Price, including all accrued and unpaid
distributions with respect to Preferred Securities called for redemption by
Textron Capital, to the extent Textron Capital has funds available therefor, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
Textron Capital (other than in connection with the distribution of Junior
Subordinated Debt Securities to the holders of Preferred Securities or a
redemption of all the Preferred Securities), the lesser of (a) the aggregate of
the liquidation amount and all accrued and unpaid distributions on the Preferred
Securities to the date of the payment to the extent Textron Capital has funds
available therefor or (b) the amount of assets of Textron Capital remaining
available for distribution to holders of the Preferred Securities in liquidation
of Textron Capital. The holders of a majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee or
to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under the Guarantee. If the Guarantee Trustee fails to enforce the
Guarantee, any holder of Preferred Securities may institute a legal proceeding
directly against Textron to enforce the Guarantee Trustee's rights under the
Guarantee without first instituting a legal proceeding against Textron Capital,
the Guarantee Trustee or any other person or entity. If Textron were to default
on its obligation to pay amounts payable on the Junior Subordinated Debt
Securities, Textron Capital would lack available funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and, in such event, holders of the Preferred Securities would not be
able to rely upon the Guarantee for payment of such amounts. Instead, holders of
the Preferred Securities would rely on the enforcement (1) by the Institutional
Trustee of its rights as registered holder of the Junior Subordinated Debt
Securities against Textron pursuant to the terms of the Junior Subordinated Debt
Securities or (2) by such holder of its right against Textron to enforce
payments on Junior Subordinated Debt Securities. See "Description of Trust
Guarantees" and "Description of Debt Securities -- Particular Terms of the
Junior Subordinated Debt Securities" in the accompanying Prospectus. The
Declaration provides that each holder of Preferred Securities, by acceptance
thereof, agrees to the provisions of the Guarantee, including the subordination
provisions thereof, and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Institutional Trustee of its rights as a holder of the Junior
Subordinated Debt Securities against Textron. In addition, the holders of a
majority in liquidation amount of the Preferred Securities will have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Institutional Trustee or to direct the exercise of any
trust or power conferred upon the Institutional Trustee under the Declaration,
including the right to direct the Institutional Trustee to exercise the remedies
available to it as a holder of the Junior Subordinated Debt Securities. If the
Institutional Trustee fails to enforce its rights under the Junior Subordinated
Debt Securities, any holder of Preferred Securities may institute a legal
proceeding directly against Textron to enforce the Institutional Trustee's
rights under the Junior Subordinated Debt Securities without first instituting
any legal proceeding against the Institutional Trustee or any other person or
entity. Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of
Textron to pay interest or principal on the Junior Subordinated Debt Securities
on the date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a holder of Preferred Securities may
directly institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Junior Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder (a "Direct Action") on or after the respective due
date specified in the Junior Subordinated Debt Securities. In connection with
such Direct Action, Textron will be subrogated to the rights of such holder of
Preferred Securities under the Declaration to the extent of any payment made by
Textron to such holder of Preferred Securities in such Direct Action. The
holders of
S-7
<PAGE> 8
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debt Securities.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Textron has the right under the Indenture (as defined herein) to defer
payments of interest on the Junior Subordinated Debt Securities by extending the
interest payment period from time to time on the Junior Subordinated Debt
Securities for an Extension Period not exceeding 20 consecutive quarterly
interest periods during which no interest shall be due and payable, provided
that no Extension Period may extend beyond the maturity of the Junior
Subordinated Debt Securities. As a consequence of such an extension, quarterly
distributions on the Preferred Securities would be deferred (but despite such
deferral would continue to accrue with interest thereon compounded quarterly) by
Textron Capital during any such extended interest payment period. In the event
that Textron exercises this right to defer interest payments, then, pursuant to
the Indenture, (a) Textron shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock or make any
guarantee payment with respect thereto, and (b) Textron shall not make any
payment of interest, principal (or premium, if any, on) or repay, repurchase or
redeem any debt securities issued by Textron which rank pari passu with or
junior to such Junior Subordinated Debt Securities. The Indenture, however, will
except from the foregoing (i) any stock dividends paid by Textron where the
dividend stock is the same stock as that on which the dividend is being paid and
(ii) any purchases by Textron of its common stock from The Paul Revere
Corporation ("Paul Revere") or its subsidiaries pursuant to the Agreement to
Purchase Stock, dated April 12, 1990, among Textron, The Paul Revere Life
Insurance Company, The Paul Revere Protective Life Insurance Company and The
Paul Revere Variable Annuity Insurance Company, and the Stock Purchase
Agreement, dated as of September 23, 1993, between Textron and Paul Revere
(together, the "Paul Revere Stock Purchase Agreements"). Prior to the
termination of any Extension Period, Textron may further extend such Extension
Period; provided, that such Extension Period, together with all such previous
and further extensions thereof, may not exceed 20 consecutive quarterly interest
periods. Upon the termination of any Extension Period and the payment of all
amounts then due, Textron may commence a new Extension Period, subject to the
above requirements. Textron may also prepay at any time all or any portion of
the interest accrued during an Extension Period. Consequently, there could be
multiple Extension Periods of varying lengths (up to nine Extension Periods of
20 consecutive quarterly interest periods each or more numerous shorter
Extension Periods) throughout the term of the Junior Subordinated Debt
Securities. See "Description of the Preferred Securities -- Distributions" and
"Description of the Junior Subordinated Debt Securities -- Option to Extend
Interest Payment Period."
Should Textron exercise its right to defer payments of interest by
extending the interest payment period, each holder of Preferred Securities will
continue to accrue income (as original issue discount ("OID")) in respect of the
deferred interest allocable to its Preferred Securities for United States
federal income tax purposes, which will be allocated but not distributed, to
holders of record of Preferred Securities. As a result, each such holder of
Preferred Securities will recognize income for United States federal income tax
purposes in advance of the receipt of cash and will not receive the cash from
Textron Capital related to such income if such holder disposes of its Preferred
Securities prior to the record date for the date on which distributions of such
amounts are made. Textron has no current intention of exercising its right to
defer payments of interest by extending the interest payment period on the
Junior Subordinated Debt Securities. However, should Textron determine to
exercise such right in the future, the market price of the Preferred Securities
is likely to be affected. A holder that disposes of its Preferred Securities
during an Extension Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Preferred Securities. In
addition, as a result of the existence of Textron's right to defer interest
payments, the market price of the Preferred Securities (which represent an
undivided beneficial interest in the Junior Subordinated Debt Securities) may be
more volatile than other securities on which OID accrues that do not have such
rights. See "United States Federal Income Taxation -- Original Issue Discount."
S-8
<PAGE> 9
PROPOSED TAX LEGISLATION
On December 7, 1995, as part of President Clinton's Seven-Year Balanced
Budget Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that would treat certain debt instruments issued on or after
December 7, 1995, including debt instruments such as the Junior Subordinated
Debt Securities, as equity for United States federal income tax purposes.
However, on December 19, 1995, the Treasury Department stated its intention to
include as part of the Proposed Legislation transition relief for debt
instruments issued pursuant to a registration statement filed with the SEC on or
before December 7, 1995, to the extent of the aggregate amount of such debt
instruments described in the registration statement. Based on the Treasury
Department's statement, it is expected that the Proposed Legislation, if enacted
without substantial modification, would not apply to the Junior Subordinated
Debt Securities. There can be no assurances, however, that the Proposed
Legislation, if enacted, will include transition relief applicable to the Junior
Subordinated Debt Securities or that other legislation enacted after the date
hereof will not otherwise adversely affect the tax treatment of the Junior
Subordinated Debt Securities, result in the distribution of the Junior
Subordinated Debt Securities to holders of the Trust Securities or, in certain
limited circumstances, the redemption of such securities by Textron. See
"Description of Preferred Securities -- Special Event Redemption or
Distribution."
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event, Textron Capital shall be dissolved,
except in the limited circumstance described below, with the result that the
Junior Subordinated Debt Securities would be distributed to the holders of the
Trust Securities in connection with the liquidation of Textron Capital. In
certain circumstances in connection with a Tax Event, Textron shall have the
right to redeem the Junior Subordinated Debt Securities, in whole or in part, in
lieu of a distribution of the Junior Subordinated Debt Securities by Textron
Capital, in which event Textron Capital will redeem the Trust Securities on a
pro rata basis to the same extent as the Junior Subordinated Debt Securities are
redeemed by Textron. See "Description of the Preferred Securities -- Special
Event Redemption or Distribution."
Under current United States federal income tax law, a distribution of
Junior Subordinated Debt Securities upon the dissolution of Textron Capital
would not be a taxable event to holders of the Preferred Securities. Upon the
occurrence of a Special Event, however, a dissolution of Textron Capital in
which holders of the Preferred Securities receive cash would be a taxable event
to such holders. See "United States Federal Income Taxation -- Receipt of Junior
Subordinated Debt Securities or Cash Upon Liquidation of Textron Capital."
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debt Securities that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of Textron
Capital were to occur. Accordingly, the Preferred Securities that an investor
may purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Junior Subordinated Debt Securities that a holder of Preferred
Securities may receive on dissolution and liquidation of Textron Capital, may
trade at a discount to the price that the investor paid to purchase the
Preferred Securities offered hereby. Because holders of Preferred Securities may
receive Junior Subordinated Debt Securities upon the occurrence of a Special
Event, prospective purchasers of Preferred Securities are also making an
investment decision with regard to the Junior Subordinated Debt Securities and
should carefully review all the information regarding the Junior Subordinated
Debt Securities contained herein and in the accompanying Prospectus. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution" and "Description of the Junior Subordinated Debt
Securities -- General."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will
not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, Textron Trustees, which voting rights are vested
exclusively in the holder of the Common Securities. See "Description of
Preferred Securities -- Voting Rights."
S-9
<PAGE> 10
TRADING PRICE
The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debt Securities. A holder who disposes of its Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Junior Subordinated Debt Securities
to the date of disposition in income as ordinary income (i.e., OID), and to add
such amount to its adjusted tax basis in its pro rata share of the underlying
Junior Subordinated Debt Securities deemed disposed of. To the extent the
selling price is less than the holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest), a holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
See "United States Federal Income Taxation -- Original Issue Discount" and "
- -- Sales of Preferred Securities."
S-10
<PAGE> 11
TEXTRON INC.
SUMMARY FINANCIAL DATA
The following table sets forth selected historical financial data with
respect to the Company for the periods indicated. The selected historical
financial data for each of the five years in the period ended December 31, 1994,
are derived from the consolidated financial statements of the Company, which
statements have been audited by Ernst & Young LLP, independent auditors. See
"Experts" in the accompanying Prospectus. The selected historical financial data
for the nine months ended September 30, 1995 and October 1, 1994 are derived
from the unaudited consolidated financial statements of the Company for such
periods and, in the opinion of management, include all adjustments (consisting
only of normal recurring adjustments) necessary for a fair presentation of the
financial position and results of operations for these periods. Operating
results for the nine months ended September 30, 1995 are not necessarily
indicative of the results that may be expected for the entire year ending
December 30, 1995. The selected historical financial data should be read in
conjunction with the Company's Consolidated Financial Statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 and the Quarterly Report on Form 10-Q for the nine months
ended September 30, 1995, which are incorporated by reference into this
Prospectus Supplement. See "Incorporation of Certain Documents by Reference" in
the accompanying Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------- YEAR
SEPT. 30, OCT. 1, --------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Sales.............................. $ 4,763 $ 5,084 $ 6,678 $ 6,271 $ 5,616 $ 5,211 $ 5,470
Interest, discount and service
charges.......................... 1,165 981 1,333 1,260 1,273 1,184 1,139
Insurance premiums................. 1,036 908 1,233 1,137 1,094 1,073 975
Investment income (including net
realized investment gains)....... 350 333 439 410 365 372 333
------ ------ ------ ------ ------ ------ ------
Total revenues................. 7,314 7,306 9,683 9,078 8,348 7,840 7,917
------ ------ ------ ------ ------ ------ ------
COSTS AND EXPENSES
Cost of sales...................... 3,905 4,241 5,514 5,210 4,560 4,185 4,425
Selling and administrative......... 1,137 1,115 1,489 1,438 1,402 1,330 1,289
Interest........................... 609 489 665 668 743 754 775
Provision for losses on collection
of finance receivables, less
recoveries....................... 120 117 162 153 160 135 123
Insurance benefits and increase in
policy liabilities............... 844 724 992 850 824 812 720
Amortization of insurance policy
acquisition costs................ 101 81 107 143 132 129 126
------ ------ ------ ------ ------ ------ ------
Total costs and expenses....... 6,716 6,767 8,929 8,462 7,821 7,345 7,458
------ ------ ------ ------ ------ ------ ------
Income before income taxes......... 598 539 754 616 527 495 459
Income taxes....................... (236) (207) (308) (234) (203) (195) (176)
Elimination of minority interest in
net income of Paul Revere........ (10) (11) (13) (3) -- -- --
------ ------ ------ ------ ------ ------ ------
Income before cumulative effect of
changes in accounting
principles....................... 352 321 433 379 324 300 283
Cumulative effect of changes in
accounting principles, net of
income taxes..................... -- -- -- -- (679) -- --
------ ------ ------ ------ ------ ------ ------
Net income (loss).................. $ 352 $ 321 $ 433 $ 379 $ (355) $ 300 $ 283
====== ====== ====== ====== ====== ====== ======
FINANCIAL POSITION
Total assets....................... $ 22,712 $ 20,737 $ 20,925 $ 19,658 $ 18,367 $ 15,737 $ 14,892
Debt:
Textron Parent Company Borrowing
Group.......................... $ 1,669 $ 1,851 $ 1,582 $ 2,025 $ 2,283 $ 1,820 $ 1,925
Finance and insurance
subsidiaries................... $ 8,536 $ 7,252 $ 7,782 $ 6,847 $ 6,440 $ 5,664 $ 5,319
Shareholders' equity............... $ 3,226 $ 2,995 $ 2,882 $ 2,780 $ 2,488 $ 2,928 $ 2,662
------ ------ ------ ------ ------ ------ ------
OTHER DATA
Capital expenditures............... $ 197 $ 198 $ 302 $ 252 $ 217 $ 156 $ 191
Depreciation....................... $ 154 $ 163 $ 212 $ 206 $ 199 $ 182 $ 179
</TABLE>
S-11
<PAGE> 12
TEXTRON INC.
SUMMARY FINANCIAL DATA -- (CONTINUED)
ADDITIONAL INFORMATION ON INVENTORIES
Textron uses the program method of accounting for its subcontract work in
connection with a commercial aircraft program, wherein it is producing wing
components for aircraft being manufactured by Airbus Industrie, a consortium of
aircraft manufacturers. The program method -- which, while not codified in
authoritative literature and used by few public companies (mainly commercial
airframe manufacturers), has evolved in practice (with origins prior to the
issuance in 1981 of Statement of Position 81-1, "Accounting for Performance of
Construction-Type and Certain Production-Type Contracts," an updated
codification of contract accounting, which Textron follows with respect to
contracts other than those under the Airbus program) -- consists of estimating
the entire quantity of units to be produced over the life of the program and the
related revenues, costs, and profits to be realized and recognizing those
profits throughout that period. As sales are recorded, cost of sales is
determined on a program-average method and is computed as a percentage of the
sale price of the units being sold under the program. The program method has
been used by Textron in accounting for this program since the criteria required
for its use are present -- that is, (a) at the beginning of the program (in
1988) Textron did not yet have firm orders that would, by themselves, recover
all of the initial investment in design, development, tooling, and early
production effort and (b) Textron has the ability to make reasonably dependable
estimates of the number of units to be produced, the period of time over which
they will be delivered, and the associated costs and selling prices.
Textron does not use the program method of accounting in connection with
any of its government contracts.
Inventories include $176 million at December 30, 1994, $162 million at
January 1, 1994, and $117 million at January 2, 1993 of unamortized tooling and
deferred learning costs related to Textron's subcontract work under the Airbus
A330/340 program. Textron has been using a program size of 400 aircraft in
accounting for this program since its inception. It had firm orders as of the
end of 1994 from its two customers under the program, both of which are members
of the consortium producing the aircraft and each of which is producing
different sections of the wings for the aircraft, covering 150 and 207 sets of
wing components, respectively; the corresponding orders as of the end of 1993
and 1992 were 114 and 157, respectively, and 78 and 157, respectively. (Airbus
Industrie had firm orders as of the end of 1994 for 263 A330/340s.) Textron has
delivered 120 units to one customer and 106 units to the other customer through
the end of 1994; deliveries in 1994 were 36 and 42 units, in 1993 were 33 and 30
units, and in 1992 were 26 and 24 units. Current customer delivery schedules
call for completion of deliveries of the 400 units in the year 2001.
The portion of the unamortized tooling and deferred learning costs that
would not be absorbed in cost of sales based on firm orders to Textron at
December 30, 1994 -- that is, assuming the aircraft program were to be canceled
after Textron completed deliveries under those orders -- was $157 million (the
corresponding amounts at the end of 1993 and 1992 were $185 million and $191
million, respectively). Textron continues to believe that in view of the orders
to date and outlook for the aircraft in the marketplace and the customer
contractual arrangements that exist on this program, it will recover all such
costs.
S-12
<PAGE> 13
CAPITALIZATION OF TEXTRON PARENT COMPANY BORROWING GROUP
The following table sets forth the unaudited summary capitalization at
September 30, 1995 of the Textron Parent Company Borrowing Group, and is
adjusted to reflect the application of the estimated net proceeds from the sale
of Preferred Securities. See "Use of Proceeds." The table should be read in
conjunction with Textron Inc.'s consolidated financial statements and notes
thereto and other financial data incorporated by reference herein. See
"Incorporation of Certain Documents by Reference" in the accompanying
Prospectus.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1995
---------------------------
ACTUAL AS ADJUSTED(1)
------ --------------
<S> <C> <C>
(IN MILLIONS)
DEBT:(2)(3)
Short-term borrowings............................................ $ 50 $ 50
Long-term borrowings............................................. 1,619
------ -------
Total debt............................................... 1,669
------ -------
TEXTRON-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF
THE TRUST(4)..................................................... --
SHAREHOLDERS' EQUITY:
Preferred stock.................................................. 15 15
Common stock..................................................... 12 12
Capital surplus.................................................. 738 738
Retained earnings................................................ 2,771 2,771
Other............................................................ 42 42
------ -------
3,578 3,578
Less cost of treasury shares............................. 352 352
------ -------
Total shareholders' equity............................... 3,226 3,226
------ -------
Total capitalization..................................... $4,895 $
====== ===========
</TABLE>
- ---------------
(1) Adjusted for the sale of Preferred Securities, the application of the
estimated net proceeds to the purchase of Junior Subordinated Debt
Securities of Textron and the application by Textron of the estimated net
proceeds of Junior Subordinated Debt Securities for the purpose set forth
under "Use of Proceeds."
(2) Textron consists of two borrowing groups -- the Textron Parent Company
Borrowing Group and its finance and insurance subsidiaries. This framework
is designed to enhance the borrowing power of the total company by
separating borrowing oriented units of a specialized business nature such as
financial services. The finance and insurance subsidiaries finance their
respective operations by borrowing from their own group of external
creditors.
(3) The amount of the net assets of Textron's finance and insurance subsidiaries
available for cash dividends and other payments to the Textron Parent
Company Borrowing Group is restricted by the terms of lending agreements and
insurance statutory requirements. As of December 31, 1994, approximately
$245 million of their net assets of $2.2 billion was available to be
transferred to the Textron Parent Company Borrowing Group pursuant to these
restrictions. AFS' and TFC's loan agreements also contain various
restrictive provisions regarding additional debt, the creation of liens or
guarantees and the making of investments.
(4) As described in this Prospectus Supplement, the sole asset of the Trust will
be $ principal amount of % Junior Subordinated Deferrable
Interest Debentures due of Textron.
S-13
<PAGE> 14
TEXTRON INC.
RATIO OF INCOME TO FIXED CHARGES
<TABLE>
The following table sets forth unaudited ratios of income to fixed charges
of Textron for the periods indicated.
<CAPTION>
NINE MONTHS ENDED
--------------------- YEAR
SEPT. 30, OCT. 1, --------------------------------
1995 1994 1994 1993 1992 1991 1990
--------- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Textron Parent Company Borrowing
Group(a)(b)(c)(d)(f).................. 3.02 2.52 2.80 2.07 1.88 1.95 2.06
Textron Inc. including all
majority-owned
subsidiaries(d)(e)(f)................. 1.91 2.00 2.04 1.86 1.67 1.62 1.56
<FN>
- ---------------
(a) The Textron Parent Company Borrowing Group consists of all Textron entities
other than its finance and insurance subsidiaries.
(b) For the purpose of calculating the ratio of income to fixed charges for the
Textron Parent Company Borrowing Group, "income" consists of income before
income taxes, excluding the equity in the undistributed pre-tax income of
the finance and insurance subsidiaries, and fixed charges. "Fixed charges"
include interest expense (including interest unrelated to borrowings
(principally interest accretion) of $26 million and $27 million for the nine
months ended September 30, 1995 and October 1, 1994, respectively, and $37
million in 1994, $37 million in 1993, $36 million in 1992, $27 million in
1991, and $26 million in 1990) and one-third of rental expense (which is
deemed representative of the interest factor in rental expense), excluding
interest and rental expense of the finance and insurance subsidiaries.
(c) Income for the Textron Parent Company Borrowing Group in 1990 includes an
extraordinary dividend of $50 million from Textron's finance and insurance
subsidiaries.
(d) Income in 1992 excludes the cumulative effect of changes in accounting
principles.
(e) For the purpose of calculating the ratio of income to fixed charges for
Textron Inc. including all majority-owned subsidiaries, "income" consists of
income before income taxes, including income of the finance and insurance
subsidiaries after elimination of minority interest in pretax income of Paul
Revere, and fixed charges. "Fixed charges" include interest expense
(including interest unrelated to borrowings (principally interest accretion)
of $26 million and $27 million for the nine months ended September 30, 1995
and October 1, 1994, respectively, and $37 million in 1994, $37 million in
1993, $36 million in 1992, $27 million in 1991, and $26 million in 1990) and
one-third of rental expense (which is deemed representative of the interest
factor in rental expense), including interest and rental expense of the
finance and insurance subsidiaries.
(f) The ratio of income to combined fixed charges and preferred stock dividends
for the Textron Parent Company Borrowing Group and Textron Inc. including
all majority-owned subsidiaries is not materially different from the amounts
reported above.
</TABLE>
ACCOUNTING TREATMENT
The financial statements of Textron Capital will be reflected in Textron's
consolidated financial statements with the Preferred Securities shown as
Company-Obligated Mandatorily Redeemable Preferred Securities of the Trust
Holding Solely $ Principal Amount of % Junior Subordinated
Deferrable Interest Debentures due of Textron.
USE OF PROCEEDS
All of the proceeds from the sale of the Preferred Securities will be
invested by Textron Capital in Junior Subordinated Debt Securities of Textron
issued pursuant to the Indenture therefor described herein and ultimately will
be used by Textron for general corporate purposes, which may include capital
expenditures, investments in subsidiaries, working capital, repayment of loans
under bank credit agreements, repurchases of outstanding common shares under
Textron's repurchase program and other business opportunities.
S-14
<PAGE> 15
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, The Chase Manhattan Bank, N.A., will
act as indenture trustee under the Declaration for purposes of compliance with
the provisions of the Trust Indenture Act. The terms of the Preferred Securities
will include those stated in the Declaration and those made part of the
Declaration by the Trust Indenture Act. The following summary of the material
terms and provisions of the Preferred Securities does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the
Declaration (a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus Supplement is a part), the Trust Act and the
Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of
Textron Capital the Trust Securities, which represent undivided beneficial
interests in the assets of Textron Capital. All of the Common Securities will be
owned, directly or indirectly, by Textron. The Common Securities rank PARI
PASSU, and payments will be made thereon on a PRO RATA basis, with the Preferred
Securities, except that upon the occurrence and during the continuance of a
Declaration Event of Default, the rights of the holders of the Common Securities
to receive payment of periodic distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. The Declaration does not permit the issuance by
Textron Capital of any securities other than the Trust Securities or the
incurrence of any indebtedness by Textron Capital. Pursuant to the Declaration,
the Institutional Trustee will own the Junior Subordinated Debt Securities
purchased by Textron Capital for the benefit of the holders of the Trust
Securities. The payment of distributions out of money held by Textron Capital,
and payments upon redemption of the Preferred Securities or liquidation of
Textron Capital, are guaranteed by Textron to the extent described under
"Description of Trust Guarantees" in the accompanying Prospectus. The Guarantee
will be held by The Chase Manhattan Bank, N.A., the Guarantee Trustee, for the
benefit of the holders of the Preferred Securities. The Guarantee does not cover
payment of distributions when Textron Capital does not have sufficient available
funds to pay such distributions. In such event, the remedy of a holder of
Preferred Securities is to vote to direct the Institutional Trustee to enforce
the Institutional Trustee's rights under the Junior Subordinated Debt
Securities. See "Description of the Preferred Securities -- Voting Rights."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will bear interest thereon at
the rate per annum of % thereof compounded quarterly. The term "distribution"
as used herein includes any such interest payable unless otherwise stated. The
amount of distributions payable for any period will be computed on the basis of
a 360-day year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from , 1996, and will be payable quarterly in arrears on
, , and of each year, commencing
, 1996, when, as and if available for payment, distributions will be
made by the Institutional Trustee, except as otherwise described below.
Textron has the right under the Indenture to defer payments of interest on
the Junior Subordinated Debt Securities by extending the interest payment period
from time to time on the Junior Subordinated Debt Securities for an Extension
Period not exceeding 20 consecutive quarterly interest periods during which no
interest shall be due and payable, provided that no Extension Period may extend
beyond the maturity of the Junior Subordinated Debt Securities. As a consequence
of such extension, quarterly distributions on the Preferred Securities would be
deferred (though such distributions would continue to accrue with interest
thereon compounded quarterly, since interest would continue to accrue on the
Junior Subordinated Debt Securities) during any such extended interest payment
period. In the event that Textron exercises this right, then, pursuant to the
Indenture, (a) Textron shall not declare or pay any dividend on, make any
distributions
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with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect
thereto, and (b) Textron shall not make any payment of interest, principal (or
premium, if any, on) or repay, repurchase or redeem any debt securities issued
by Textron which rank PARI PASSU with or junior to such Junior Subordinated Debt
Securities. The Indenture, however, will except from the foregoing (i) any stock
dividends paid by Textron where the dividend stock is the same stock as that on
which the dividend is being paid and (ii) any purchases by Textron of its common
stock from Paul Revere or its subsidiaries pursuant to the Paul Revere Stock
Purchase Agreements. Prior to the termination of any Extension Period, Textron
may further extend such Extension Period; PROVIDED, that such Extension Period,
together with all such previous and further extensions thereof, may not exceed
20 consecutive quarterly interest periods. Upon the termination of any Extension
Period and the payment of all amounts then due, Textron may commence a new
Extension Period, subject to the above requirements. Textron may also prepay at
any time all or any portion of the interest accrued during an Extension Period.
Consequently, there could be multiple Extension Periods of varying lengths (up
to nine Extension Periods of 20 consecutive quarterly interest periods each or
more numerous shorter Extension Periods) throughout the term of the Junior
Subordinated Debt Securities. See "Description of the Junior Subordinated Debt
Securities -- Interest" and " -- Option to Extend Interest Payment Period." If
distributions are deferred, the deferred distributions and accrued interest
thereon shall be paid to holders of record of the Preferred Securities as they
appear on the books and records of Textron Capital on the record date next
following the termination of such deferral period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that Textron Capital has funds available for the payment of such
distributions in the Property Account. Textron Capital's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received from Textron on the Junior Subordinated Debt Securities. See
"Description of the Junior Subordinated Debt Securities." The payment of
distributions out of moneys held by Textron Capital is guaranteed by Textron to
the extent set forth under "Description of Trust Guarantees" in the accompanying
Prospectus.
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of Textron Capital on the
relevant record dates, which, as long as the Preferred Securities remain in
book-entry only form, will be one Business Day prior to the relevant payment
dates. Such distributions will be paid through the Institutional Trustee who
will hold amounts received in respect of the Junior Subordinated Debt Securities
in the Property Account for the benefit of the holders of the Trust Securities.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each such payment will be made as described under "Book-Entry Only
Issuance -- The Depository Trust Company" below. In the event that the Preferred
Securities do not continue to remain in book-entry only form, the Regular
Trustees shall have the right to select relevant record dates, which shall be
more than one Business Day prior to the relevant payment dates. In the event
that any date on which distributions are to be made on the Preferred Securities
is not a Business Day, then payment of the distributions payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such record date. A "Business Day" shall mean any day other
than Saturday, Sunday or any other day on which banking institutions in New York
City (in the State of New York) are permitted or required by any applicable law
to close.
MANDATORY REDEMPTION OF TRUST SECURITIES
The Junior Subordinated Debt Securities will mature on , ,
and may be redeemed, in whole or in part, at any time on or after ,
, or at any time in certain circumstances upon the occurrence of a Tax
Event (as described under "Special Event Redemption or Distribution" below). See
"Description of the Junior Subordinated Debt Securities -- Optional Redemption."
Upon the repayment of the Junior Subordinated Debt Securities, whether at
maturity or upon redemption (either at the option of Textron or pursuant to a
Tax Event), the proceeds from such repayment or payment shall simultaneously be
applied to redeem Trust Securities having an aggregate liquidation amount equal
to the aggregate principal
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amount of the Junior Subordinated Debt Securities so repaid or redeemed at the
Redemption Price; PROVIDED, that holders of Trust Securities shall be given not
less than 30 nor more than 60 days notice of such redemption. In the event that
fewer than all of the outstanding Preferred Securities are to be redeemed, the
Preferred Securities will be redeemed PRO RATA as described under "Book-Entry
Only Issuance -- The Depository Trust Company" below.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a "Dissolution Tax Opinion") to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision or
regulatory determination on or after such date), in either case after the date
of this Prospectus Supplement, there is more than an insubstantial risk that (i)
Textron Capital would be subject to United States federal income tax with
respect to income accrued or received on the Junior Subordinated Debt
Securities, (ii) interest payable to Textron Capital on the Junior Subordinated
Debt Securities would not be deductible by Textron for United States federal
income tax purposes or (iii) Textron Capital would be subject to more than a DE
MINIMIS amount of other taxes, duties or other governmental charges.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent counsel to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a "Change
in 1940 Act Law"), there is more than an insubstantial risk that Textron Capital
is or will be considered an "investment company" which is required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), which Change in 1940 Act Law becomes effective on or after the date of
this Prospectus Supplement.
If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, Textron Capital
shall, except in the limited circumstances described below, be dissolved with
the result that the Junior Subordinated Debt Securities with an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate of, and accrued and unpaid
interest equal to accrued and unpaid distributions on, the Trust Securities,
would be distributed to the holders of the Trust Securities in liquidation of
such holders' interests in Textron Capital on a PRO RATA basis within 90 days
following the occurrence of such Special Event; PROVIDED, HOWEVER, that in the
case of the occurrence of a Tax Event, such dissolution and distribution shall
be conditioned on the Regular Trustees' receipt of an opinion of nationally
recognized independent tax counsel experienced in such matters (a "No
Recognition Opinion"), which opinion may rely on published revenue rulings of
the Internal Revenue Service, to the effect that the holders of the Trust
Securities will not recognize any gain or loss for United States federal income
tax purposes as a result of such dissolution and distribution of Junior
Subordinated Debt Securities and, PROVIDED, FURTHER, that, if at the time there
is available to Textron Capital the opportunity to eliminate, within such 90 day
period, the Special Event by taking some ministerial action, such as filing a
form or making an election, or pursuing some other similar reasonable measure,
which has no adverse effect on Textron Capital, Textron or the holders of the
Trust Securities, Textron Capital will pursue such measure in lieu of
dissolution. Furthermore, if in the case of the occurrence of a Tax Event, (i)
Textron has received an opinion (a "Redemption Tax Opinion") of nationally
recognized independent tax counsel experienced in such matters that, as a result
of a Tax Event, there is more than an insubstantial risk that Textron would be
precluded from deducting the interest on the Junior Subordinated Debt Securities
for United States federal income tax purposes, even after the Junior
Subordinated Debt Securities were distributed to the holders of Trust Securities
in liquidation of such holders' interests in Textron Capital as described above,
or (ii) the Regular Trustees shall have been informed by such tax counsel that
it cannot deliver a No Recognition Opinion to Textron Capital, Textron shall
have the right, upon not less than 30 nor
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more than 60 days notice, to redeem the Junior Subordinated Debt Securities, in
whole or in part, for cash within 90 days following the occurrence of such Tax
Event, and, following such redemption, Trust Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debt Securities so redeemed shall be redeemed by Textron Capital at
the Redemption Price on a PRO RATA basis; PROVIDED, HOWEVER, that if at the time
there is available to Textron or Textron Capital the opportunity to eliminate,
within such 90 day period, the Tax Event by taking some ministerial action, such
as filing a form or making an election or pursuing some other similar reasonable
measure that has no adverse effect on Textron Capital, Textron or the holders of
the Trust Securities, Textron or Textron Capital will pursue such measure in
lieu of redemption.
If the Junior Subordinated Debt Securities are distributed to the holders
of the Preferred Securities, Textron will use its best efforts to cause the
Junior Subordinated Debt Securities to be listed on the New York Stock Exchange
or on such other exchange as the Preferred Securities are then listed.
After the date for any distribution of Junior Subordinated Debt Securities
upon dissolution of Textron Capital, (i) the Preferred Securities will no longer
be deemed to be outstanding, (ii) the securities depositary or its nominee, as
the record holder of the Preferred Securities, will receive a registered global
certificate or certificates representing the Junior Subordinated Debt Securities
to be delivered upon such distribution, and (iii) any certificates representing
Preferred Securities not held by the Depositary or its nominee will be deemed to
represent Junior Subordinated Debt Securities having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on such Preferred Securities until
such certificates are presented to Textron or its agent for transfer or
reissuance.
There can be no assurance as to the market prices for either the Preferred
Securities or the Junior Subordinated Debt Securities that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of
Textron Capital were to occur. Accordingly, the Preferred Securities that an
investor may purchase, whether pursuant to the offer made hereby or in the
secondary market, or the Junior Subordinated Debt Securities that an investor
may receive if a dissolution and liquidation of Textron Capital were to occur,
may trade at a discount to the price that the investor paid to purchase the
Preferred Securities offered hereby.
REDEMPTION PROCEDURES
Textron Capital may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If Textron Capital gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, provided that Textron has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Junior Subordinated Debt Securities, Textron
Capital will irrevocably deposit with the Depositary funds sufficient to pay the
applicable Redemption Price and will give the Depositary irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Preferred Securities. See "Book-Entry Only Issuance -- The Depository Trust
Company." If notice of redemption shall have been given and funds deposited as
required, then, immediately prior to the close of business on the date of such
deposit, distributions will cease to accrue and all rights of holders of such
Preferred Securities so called for redemption will cease, except the right of
the holders of such Preferred Securities to receive the Redemption Price but
without interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price in respect of Preferred Securities is
improperly withheld or refused and not paid either by Textron Capital, or by
Textron pursuant to the Guarantee, distributions on such Preferred Securities
will continue to accrue at the then
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applicable rate from the original redemption date to the date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities
are to be redeemed, the Preferred Securities will be redeemed pro rata as
described below under "Book-Entry Only Issuance -- The Depository Trust
Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), Textron or its subsidiaries may at any
time, and from time to time, purchase outstanding Preferred Securities by
tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of Textron Capital (each a "Liquidation"), the then
holders of the Preferred Securities will be entitled to receive out of the
assets of Textron Capital, after satisfaction of liabilities to creditors,
distributions in an amount equal to the aggregate of the stated liquidation
amount of $25 per Preferred Security plus accrued and unpaid distributions
thereon to the date of payment (the "Liquidation Distribution"), unless, in
connection with such Liquidation, Junior Subordinated Debt Securities in an
aggregate stated principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and
accrued and unpaid interest equal to accrued and unpaid distributions on, the
Preferred Securities have been distributed on a PRO RATA basis to the holders of
the Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because Textron Capital has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by Textron Capital on the Preferred Securities shall be paid on a PRO RATA
basis. The holders of the Common Securities will be entitled to receive
distributions upon any such dissolution PRO RATA with the holders of the
Preferred Securities, except that if a Declaration Event of Default has occurred
and is continuing, the Preferred Securities shall have a preference over the
Common Securities with regard to such distributions.
Pursuant to the Declaration, Textron Capital shall terminate (i) on
, , the expiration of the term of the Trust, (ii) upon the
bankruptcy of Textron or the holder of the Common Securities, (iii) upon the
filing of a certificate of dissolution or its equivalent with respect to the
holder of the Common Securities or Textron, the filing of a certificate of
cancellation with respect to Textron Capital, or the revocation of the charter
of the holder of the Common Securities or Textron and the expiration of 90 days
after the date of revocation without a reinstatement thereof, (iv) upon the
distribution of Junior Subordinated Debt Securities upon the occurrence of a
Special Event, (v) upon the entry of a decree of a judicial dissolution of the
holder of the Common Securities, Textron or Textron Capital, or (vi) upon the
redemption of all the Trust Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); PROVIDED, that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Preferred Securities have been so cured, waived, or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Preferred Securities and only the holders
of the Preferred Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration, and therefore the
Indenture.
If the Property Trustee fails to enforce its rights under the Junior
Subordinated Debt Securities, any holder of Preferred Securities may institute a
legal proceeding against Textron to enforce the Property Trustee's rights under
the Subordinated Debt Securities. Notwithstanding the foregoing, if a
Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of Textron to pay
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interest or principal on the Junior Subordinated Debt Securities on the date
such interest or principal is otherwise payable (or in the case of redemption,
the redemption date), then a holder of Preferred Securities may directly
institute a proceeding for enforcement of payment to such holder directly of the
principal of or interest on the Junior Subordinated Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debt Securities. In connection with such Direct Action,
Textron will be subrogated to the rights of such holder of Preferred Securities
under the Declaration to the extent of any payment made by Textron to such
holder of Preferred Securities in such Direct Action. The holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debt Securities.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debt Securities will have
the right under the Indenture to declare the principal of and interest on the
Junior Subordinated Debt Securities to be immediately due and payable. Textron
and Textron Capital are each required to file annually with the Institutional
Trustee an officers' certificate as to its compliance with all conditions and
covenants under the Declaration.
VOTING RIGHTS
Except as described herein, under the Trust Act, the Trust Indenture Act
and under "Description of Trust Guarantees -- Modification of Trust Guarantees;
Assignment" in the accompanying Prospectus, and as otherwise required by law and
the Declaration, the holders of the Preferred Securities will have no voting
rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration including the right to direct the Institutional
Trustee, as holder of the Junior Subordinated Debt Securities, to (i) exercise
the remedies available under the Indenture with respect to the Junior
Subordinated Debt Securities, (ii) waive any past Indenture Event of Default
that is waivable under Section 5.13 of the Base Indenture (as defined herein),
or (iii) exercise any right to rescind or annul a declaration that the principal
of all the Junior Subordinated Debt Securities shall be due and payable;
provided, however, that, where a consent or action under the Indenture would
require the consent or act of holders of more than a majority in principal
amount of the Junior Subordinated Debt Securities (a "Super-Majority") affected
thereby, only the holders of at least such Super-Majority in aggregate
liquidation amount of the Preferred Securities may direct the Institutional
Trustee to give such consent or take such action. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debt Securities, any
record holder of Preferred Securities may, after such holder's written request
to the Institutional Trustee to enforce such rights, institute a legal
proceeding directly against Textron to enforce the Institutional Trustee's
rights under the Junior Subordinated Debt Securities without first instituting
any legal proceeding against the Institutional Trustee or any other person or
entity. The Institutional Trustee shall notify all holders of the Preferred
Securities of any notice of default received from the Indenture Trustee with
respect to the Junior Subordinated Debt Securities. Such notice shall state that
such Indenture Event of Default also constitutes a Declaration Event of Default.
Except with respect to directing the time, method and place of conducting a
proceeding for a remedy, the Institutional Trustee shall not take any of the
actions described in clauses (i), (ii) or (iii) above unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that, as a result
of such action, Textron Capital will not fail to be classified as a grantor
trust for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debt Securities, is required under the Indenture with
respect to any amendment, modification or termination of the Indenture, the
Institutional Trustee shall request the direction of the holders of the Trust
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by
a majority in liquidation amount of the Trust Securities voting
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together as a single class; provided, however, that where a consent under the
Indenture would require the consent of a Super Majority, the Institutional
Trustee may only give such consent at the direction of the holders of at least
the proportion in liquidation amount of the Trust Securities which the relevant
Super Majority represents of the aggregate principal amount of the Junior
Subordinated Debt Securities outstanding. The Institutional Trustee shall be
under no obligation to take any such action in accordance with the directions of
the holders of the Trust Securities unless the Institutional Trustee has
obtained an opinion of tax counsel to the affect that for the purposes of United
States federal income tax Textron Capital will not be classified as other than a
grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for Textron Capital to
redeem and cancel Preferred Securities or distribute Junior Subordinated Debt
Securities in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by Textron or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, Textron, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company" below.
Holders of the Preferred Securities will have no rights to appoint or
remove the Textron Trustees, who may be appointed, removed or replaced solely by
Textron as the indirect or direct holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee), provided
that, if any proposed amendment provides for, or the Regular Trustees otherwise
propose to effect, (i) any action that would adversely affect the powers,
preferences or special rights of the Trust Securities, whether by way of
amendment to the Declaration or otherwise or (ii) the dissolution, winding-up or
termination of Textron Capital other than pursuant to the terms of the
Declaration, then the holders of the Trust Securities voting together as a
single class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of at
least a majority in liquidation amount of the Trust Securities affected thereby;
provided, that, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or the Common Securities,
then only the affected class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of a majority in liquidation amount of such class of Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause Textron
Capital to be classified for purposes of United States federal income taxation
as other than a grantor trust, (ii) reduce or otherwise adversely affect the
powers of
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the Institutional Trustee or (iii) cause Textron Capital to be deemed an
"investment company" which is required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
Textron Capital may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. Textron Capital may, with the consent of the Regular Trustees
and without the consent of the holders of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State; provided, that (i) such successor entity either (x)
expressly assumes all of the obligations of Textron Capital under the Trust
Securities or (y) substitutes for the Preferred Securities other securities
having substantially the same terms as the Trust Securities (the "Successor
Securities"), so long as the Successor Securities rank the same as the Trust
Securities rank with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) Textron expressly acknowledges a trustee of such
successor entity possessing the same powers and duties as the Institutional
Trustee, in its capacity as the holder of the Junior Subordinated Debt
Securities, (iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with another organization on
which the Preferred Securities are then listed or quoted, (iv) such merger,
consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (vi) such successor entity
has a purpose identical to that of Textron Capital, (vii) prior to such merger,
consolidation, amalgamation or replacement, Textron has received an opinion of a
nationally recognized independent counsel to Textron Capital experienced in such
matters to the effect that, (A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Trust Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of the holders'
interest in the new entity), and (B) following such merger, consolidation,
amalgamation or replacement, neither Textron Capital nor such successor entity
will be required to register as an investment company under the 1940 Act and
(viii) Textron guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Guarantee and the
Common Securities Guarantee. Notwithstanding the foregoing, Textron Capital
shall not, except with the consent of holders of 100% in liquidation amount of
the Trust Securities, consolidate, amalgamate, merge with or into, or be
replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it, if such consolidation,
amalgamation, merger or replacement would cause Textron Capital or the Successor
Entity to be classified as other than a grantor trust for United States federal
income tax purposes.
BOOK-ENTRY ONLY ISSUANCE-THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Preferred Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Preferred Securities certificates,
representing the total aggregate number of Preferred Securities, will be issued
and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Preferred
Securities as represented by a global certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its
participants ("Participants") deposit with
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DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations ("Direct Participants").
DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others,
such as securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial relationship
with a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Securities and Exchange Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Preferred Securities, except in the event that
use of the book-entry system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce the amount of the
interest of each Direct Participant in such Preferred Securities in accordance
with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to Textron Capital as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co. consenting
or voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy). Textron and Textron Capital believe that the arrangements
among DTC, Direct and Indirect Participants, and Beneficial Owners will enable
the Beneficial Owners to exercise rights equivalent in substance to the rights
that can be directly exercised by a holder of a beneficial interest in Textron
Capital.
Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and such payments will be the responsibility of such Participant and not of DTC,
Textron Capital or Textron, subject to any statutory or regulatory requirements
to the contrary that may be in effect from time to time. Payment of
distributions to DTC is the responsibility of Textron Capital, disbursement of
such payments
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to Direct Participants is the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
Except as provided herein, a Beneficial Owner in a global Preferred
Security certificate will not be entitled to receive physical delivery of
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
Textron Capital. Under such circumstances, in the event that a successor
securities depositary is not obtained, Preferred Securities certificates are
required to be printed and delivered. Additionally, the Regular Trustees (with
the consent of Textron) may decide to discontinue use of the system of
book-entry transfers through DTC (or any successor depositary) with respect to
the Preferred Securities. In that event, certificates for the Preferred
Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Textron and Textron Capital believe to be
reliable, but neither Textron nor Textron Capital takes responsibility for the
accuracy thereof.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after default, shall exercise the
same degree of care as a prudent individual would exercise in the conduct of his
or her own affairs. Subject to such provisions, the Institutional Trustee is
under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Preferred Securities, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The holders of Preferred Securities will not be
required to offer such indemnity in the event such holders, by exercising their
voting rights, direct the Institutional Trustee to take any action following a
Declaration Event of Default.
PAYING AGENT
In the event that the Preferred Securities do not remain in book-entry only
form, the following provisions would apply:
The Institutional Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of Textron Capital, but upon payment (with the giving of
such indemnity as Textron Capital or Textron may require) in respect of any tax
or other government charges that may be imposed in relation to it.
Textron Capital will not be required to register or cause to be registered
the transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate Textron Capital
in such a way so that Textron Capital will not be required to register as an
"investment company" under the 1940 Act or characterized as other than a grantor
trust for United States federal income tax purposes. Textron is authorized and
directed to conduct its affairs so that the Junior Subordinated Debt Securities
will be treated as indebtedness of Textron for United States federal income tax
purposes. In this connection, Textron and the Regular Trustees are authorized to
take any action, not inconsistent with applicable law, the certificate of trust
of Textron Capital or the certificate of incorporation of Textron, that each of
Textron and the Regular Trustees determine in their discretion to be necessary
or desirable to achieve such end, as long as such action does not adversely
affect the interests of the holders of the Preferred Securities or vary the
terms thereof.
Holders of the Preferred Securities have no preemptive rights.
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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
Set forth below is a description of the specific terms of the Junior
Subordinated Debt Securities in which Textron Capital will invest the proceeds
from the issuance and sale of the Trust Securities. This description supplements
the description of the general terms and provisions of the Junior Subordinated
Debt Securities set forth in the accompanying Prospectus under the caption
"Description of Debt Securities." The following description does not purport to
be complete and is subject to, and is qualified in its entirety by reference to,
the description in the accompanying Prospectus and the Junior Subordinated
Indenture, dated as of , 1996, (the "Base Indenture") between
Textron and The Chase Manhattan Bank, N.A., as Trustee (the "Indenture
Trustee"), as supplemented by a First Supplemental Indenture, dated as of
, 1996 (the Base Indenture, as so supplemented, is hereinafter
referred to as the "Indenture"), the forms of which are filed as Exhibits to the
Registration Statement of which this Prospectus Supplement and the accompanying
Prospectus form a part. Certain capitalized terms used herein are defined in the
Indenture.
Under certain circumstances involving the dissolution of Textron Capital
following the occurrence of a Special Event, Junior Subordinated Debt Securities
may be distributed to the holders of the Trust Securities in liquidation of
Textron Capital. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution."
If the Junior Subordinated Debt Securities are distributed to the holders
of the Preferred Securities, Textron will use its best efforts to have the
Junior Subordinated Debt Securities listed on the New York Stock Exchange or on
such other national securities exchange or similar organization on which the
Preferred Securities are then listed or quoted.
GENERAL
The Junior Subordinated Debt Securities will be issued as unsecured debt
under the Indenture. The Junior Subordinated Debt Securities will be limited in
aggregate principal amount to approximately $ , such amount being the
sum of the aggregate stated liquidation of the Preferred Securities and the
capital contributed by Textron in exchange for the Common Securities (the
"Textron Payment").
The Junior Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debt
Securities will mature and become due and payable, together with any accrued and
unpaid interest thereon including Compound Interest (as defined herein) and
Additional Interest (as defined herein), if any, on , .
If Junior Subordinated Debt Securities are distributed to holders of
Preferred Securities in liquidation of such holders' interests in Textron
Capital, such Junior Subordinated Debt Securities will initially be issued in
the form of one or more Global Securities (as defined under "Book-Entry and
Settlement" below). As described herein, under certain limited circumstances,
Junior Subordinated Debt Securities may be issued in certificated form in
exchange for a Global Security. See "Book-Entry and Settlement" below. In the
event that Junior Subordinated Debt Securities are issued in certificated form,
such Junior Subordinated Debt Securities will be in denominations of $25 and
integral multiples thereof and may be transferred or exchanged at the offices
described below. Payments on Junior Subordinated Debt Securities issued as a
Global Security will be made to DTC, a successor depositary or, in the event
that no depositary is used, to a Paying Agent for the Junior Subordinated Debt
Securities. In the event Junior Subordinated Debt Securities are issued in
certificated form, principal and interest will be payable, the transfer of the
Junior Subordinated Debt Securities will be registrable and Junior Subordinated
Debt Securities will be exchangeable for Junior Subordinated Debt Securities of
other denominations of a like aggregate principal amount at the corporate trust
office of the Indenture Trustee in , New York; provided, that
payment of interest may be made at the option of Textron by check mailed to the
address of the persons entitled thereto.
There are no covenants or provisions in the Indenture which would afford
the holders of the Junior Subordinated Debt Securities protection in the event
of a highly leveraged transaction, reorganization, restructuring, merger or
similar transaction involving Textron that may adversely affect such holders.
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SUBORDINATION
The Indenture provides that the Junior Subordinated Debt Securities are
subordinated and junior in right of payment to all Senior Indebtedness of
Textron. No payment of principal (including redemption payments), premium, if
any, or interest on the Junior Subordinated Debt Securities may be made if (i)
any Senior Indebtedness of Textron is not paid when due, (ii) any applicable
grace period with respect to such default has ended and such default has not
been cured or waived or ceased to exist, or (iii) the maturity of any Senior
Indebtedness of Textron has been accelerated because of a default. Upon any
distribution of assets of Textron to creditors upon any dissolution, winding-up,
liquidation or reorganization, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings, all principal,
premium, if any, and interest due or to become due on all Senior Indebtedness of
Textron must be paid in full before the holders of Junior Subordinated Debt
Securities are entitled to receive or retain any payment. Upon satisfaction of
all claims of all Senior Indebtedness then outstanding, the rights of the
holders of the Junior Subordinated Debt Securities will be subrogated to the
rights of the holders of Senior Indebtedness of Textron to receive payments or
distributions applicable to Senior Indebtedness until all amounts owing on the
Junior Subordinated Debt Securities are paid in full.
The term "Senior Indebtedness" means, with respect to Textron, (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of such
obligor, for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor, (ii) all
capital lease obligations of such obligor, (iii) all obligations of such obligor
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such obligor and all obligations of such obligor under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of such obligor for the
reimbursement on any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction, (v) all obligations of the type referred
to in clauses (i) through (iv) above of other persons for the payment of which
such obligor is responsible or liable as obligor, guarantor or otherwise and
(vi) all obligations of the type referred to in clauses (i) through (v) above of
other persons secured by any lien on any property or asset of such obligor
(whether or not such obligation is assumed by such obligor), except for (1) any
such indebtedness that is by its terms subordinated to or pari passu with the
Junior Subordinated Debt Securities and (2) any indebtedness between or among
such obligor or its affiliates, including all other debt securities and
guarantees in respect of those debt securities, issued to (a) any other Textron
Trust or a trustee of such trust and (b) any other trust, or a trustee of such
trust, partnership or other entity affiliated with Textron that is a financing
vehicle of Textron (a "financing entity") in connection with the issuance by
such financial entity of Preferred Securities or other securities that rank pari
passu with, or junior to, the Preferred Securities. Such Senior Indebtedness
shall continue to be Senior Indebtedness and be entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or waiver
of any term of such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by Textron. As of , 1995, Senior Indebtedness of
Textron aggregated approximately $ .
OPTIONAL REDEMPTION
Textron shall have the right to redeem the Junior Subordinated Debt
Securities, in whole or in part, from time to time, on or after ,
, or at any time in certain circumstances upon the occurrence of a Tax
Event as described under "Description of the Preferred Securities -- Special
Event Redemption or Distribution," upon not less than 30 nor more than 60 days
notice, at a redemption price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest, including Additional Interest, if
any, to the redemption date. If a partial redemption of the Preferred Securities
resulting from a partial redemption of the Junior Subordinated Debt Securities
would result in the delisting of the Preferred Securities, Textron may only
redeem the Junior Subordinated Debt Securities in whole.
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INTEREST
Each Junior Subordinated Debt Security shall bear interest at the rate of
% per annum from the original date of issuance, payable quarterly in arrears
on , , and of each year (each an
"Interest Payment Date"), commencing , 1996, to the person in whose
name such Junior Subordinated Debt Security is registered, subject to certain
exceptions, at the close of business on the Business Day next preceding such
Interest Payment Date. In the event the Junior Subordinated Debt Securities
shall not continue to remain in book-entry only form, Textron shall have the
right to select record dates, which shall be more than one Business Day prior to
the Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period for which interest is computed
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the Junior
Subordinated Debt Securities is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Textron shall have the right at any time, and from time to time, during the
term of the Junior Subordinated Debt Securities, to defer payments of interest
by extending the interest payment period for a period not exceeding 20
consecutive quarters, at the end of which Extension Period, Textron shall pay
all interest then accrued and unpaid (including any Additional Interest, as
herein defined) together with interest thereon compounded quarterly at the rate
specified for the Junior Subordinated Debt Securities to the extent permitted by
applicable law ("Compound Interest"); provided, that during any such Extension
Period, (a) Textron will not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock or make any
guarantee payment with respect thereto, and (b) Textron shall not make any
payment of interest, principal (or premium, if any, on) or repay, repurchase or
redeem any debt securities issued by Textron which rank pari passu with or
junior to such Junior Subordinated Debt Securities. The Indenture, however, will
except from the foregoing (i) any stock dividends paid by Textron where the
dividend stock is the same stock as that on which the dividend is being paid and
(ii) any purchases by Textron of its common stock from Paul Revere or its
subsidiaries pursuant to the Paul Revere Stock Purchase Agreements. Prior to the
termination of any Extension Period, Textron may further defer payments of
interest by extending such Extension Period; provided, however, that such
Extension Period, including all such previous and further extensions, may not
exceed 20 consecutive quarterly interest periods. Upon the termination of any
Extension Period and the payment of all amounts then due, Textron may commence a
new Extension Period, subject to the terms set forth in this section. No
interest during an Extension Period, except at the end thereof, shall be due and
payable. Textron has no present intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debt Securities. If the Institutional Trustee shall be the sole
holder of the Junior Subordinated Debt Securities, Textron shall give the
Regular Trustees and the Institutional Trustee notice of its selection of such
Extension Period one Business Day prior to the earlier of (i) the date
distributions on the Preferred Securities are payable or (ii) the date the
Regular Trustees are required to give notice to the New York Stock Exchange (or
other applicable self-regulatory organization) or to holders of the Preferred
Securities of the record date or the date such distribution is payable. The
Regular Trustees shall give notice of Textron's selection of such Extension
Period to the holders of the Preferred Securities. If the Institutional Trustee
shall not be the sole holder of the Junior Subordinated Debt Securities, Textron
shall give the holders of the Junior Subordinated Debt Securities notice of its
selection of such Extension Period ten Business Days prior to the earlier of (i)
the Interest Payment Date or (ii) the date upon which Textron is required to
give notice to the New York Stock Exchange (or other applicable self-regulatory
organization) or to holders of the Junior Subordinated Debt Securities of the
record or payment date of such related interest payment.
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ADDITIONAL INTEREST
If at any time Textron Capital shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, Textron will pay as additional interest ("Additional Interest") such
additional amounts as shall be required so that the net amounts received and
retained by Textron Capital after paying any such taxes, duties, assessments or
other governmental charges will be not less than the amounts Textron Capital
would have received had no such taxes, duties, assessments or other governmental
charges been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debt Securities,
will have the right to declare the principal of and the interest on the Junior
Subordinated Debt Securities (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debt Securities. See "Description of Debt
Securities -- Events of Default" and " -- Particular Terms of the Junior
Subordinated Debt Securities" in the accompanying Prospectus for a description
of the Events of Default. An Indenture Event of Default also constitutes a
Declaration Event of Default. The holders of Preferred Securities in certain
circumstances have the right to direct the Institutional Trustee to exercise its
rights as the holder of the Junior Subordinated Debt Securities. See
"Description of the Preferred Securities -- Declaration Events of Default" and
" -- Voting Rights."
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of Textron to pay
interest or principal on the Junior Subordinated Debt Securities on the date
such interest or principal is otherwise payable, Textron acknowledges that, in
such event, a holder of Preferred Securities may institute a Direct Action for
payment on or after the respective due date specified in the Junior Subordinated
Debt Securities. Notwithstanding any payments made to such holder of Preferred
Securities by Textron in connection with a Direct Action, Textron shall remain
obligated to pay the principal of or interest on the Junior Subordinated Debt
Securities held by Textron Capital or the Property Trustee of Textron Capital,
and Textron shall be subrogated to the rights of the holder of such Preferred
Securities with respect to payments on the Preferred Securities to the extent of
any payments made by the Company to such holder in any Direct Action. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debt Securities.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of Textron
Capital as a result of the occurrence of a Special Event, the Junior
Subordinated Debt Securities will be issued in the form of one or more global
certificates (each a "Global Security") registered in the name of the depositary
or its nominee. Except under the limited circumstances described below, Junior
Subordinated Debt Securities represented by the Global Security will not be
exchangeable for, and will not otherwise be issuable as, Junior Subordinated
Debt Securities in definitive form. The Global Securities described above may
not be transferred except by the depositary to a nominee of the depositary or by
a nominee of the depositary to the depositary or another nominee of the
depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debt Securities in definitive form and will not be considered the
Holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debt
Securities shall be exchangeable, except for another Global Security of
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like denomination and tenor to be registered in the name of the depositary or
its nominee or to a successor depositary or its nominee. Accordingly, each
Beneficial Owner must rely on the procedures of the depositary or if such person
is not a Participant, on the procedures of the Participant through which such
person owns its interest to exercise any rights of a holder under the Indenture.
THE DEPOSITARY
If Junior Subordinated Debt Securities are distributed to holders of
Preferred Securities in liquidation of such holders' interests in Textron
Capital, DTC will act as securities depositary for the Junior Subordinated Debt
Securities. For a description of DTC and the specific terms of the depositary
arrangements, see "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company." As of the date of this Prospectus
Supplement, the description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any debt
obligations represented by one or more Global Securities held by DTC. Textron
may appoint a successor to DTC or any successor depositary in the event DTC or
such successor depositary is unable or unwilling to continue as a depository for
the Global Securities.
None of Textron, Textron Capital, the Indenture Trustee, any paying agent
and any other agent of Textron or the Indenture Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
for such Junior Subordinated Debt Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Junior Subordinated Debt
Securities registered in the names of persons other than the depositary or its
nominee only if (i) the depositary notifies Textron that it is unwilling or
unable to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) the depositary, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
depositary is required to be so registered to act as such depositary and no
successor depositary shall have been appointed, (iii) Textron, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Event of Default with respect to such Junior
Subordinated Debt Securities. Any Global Security that is exchangeable pursuant
to the preceding sentence shall be exchangeable for Junior Subordinated Debt
Securities registered in such names as the depositary shall direct. It is
expected that such instructions will be based upon directions received by the
depositary from its Participants with respect to ownership of beneficial
interests in such Global Security.
MISCELLANEOUS
The Indenture will provide that Textron will pay all fees and expenses
related to (i) the offering of the Trust Securities and the Junior Subordinated
Debt Securities, (ii) the organization, maintenance and dissolution of Textron
Capital, (iii) the retention of the Textron Trustees and (iv) the enforcement by
the Institutional Trustee of the rights of the holders of the Preferred
Securities. The payment of such fees and expenses will be fully and
unconditionally guaranteed by Textron.
EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of Textron Capital is to
issue the Trust Securities evidencing undivided beneficial interests in the
assets of Textron Capital, and to invest the proceeds from such issuance and
sale in the Junior Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Debt
Securities
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will be equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Junior Subordinated Debt Securities will match the distribution rate and
distribution and other payment dates for the Preferred Securities; (iii) Textron
shall pay all, and Textron Capital shall not be obligated to pay, directly or
indirectly, all costs, expenses, debt and obligations of Textron Capital other
than with respect to the Trust Securities; and (iv) the Declaration further
provides that the Textron Trustees shall not cause or permit Textron Capital to,
among other things, engage in any activity that is not consistent with the
purposes of Textron Capital.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by Textron as and to the extent set forth under
"Description of Trust Guarantees" in the accompanying Prospectus. If Textron
does not make interest payments on the Junior Subordinated Debt Securities
purchased by Textron Capital, it is expected that Textron Capital will not have
sufficient funds to pay distributions on the Preferred Securities. The Guarantee
is a full and unconditional guarantee from the time of its issuance but does not
apply to any payment of distributions unless and until Textron Capital has
sufficient funds for the payment of such distributions.
The Guarantee covers the payment of distributions and other payments on the
Preferred Securities only if and to the extent that Textron has made a payment
of interest or principal on the Junior Subordinated Debt Securities held by
Textron Capital as its sole asset. The Guarantee, when taken together with
Textron's obligations under the Junior Subordinated Debt Securities and the
Indenture and its obligations under the Declaration, including its obligations
to pay costs, expenses, debts and liabilities of Textron Capital (other than
with respect to the Trust Securities), provide a full and unconditional
guarantee of amounts on the Preferred Securities.
If Textron fails to make interest or other payments on the Junior
Subordinated Debt Securities when due (taking account of any Extension Period),
the Declaration provides a mechanism whereby the holders of the Preferred
Securities, using the procedures described in "Description of the Preferred
Securities -- Book Entry Only Issuance -- The Depository Trust Company" and
" -- Voting Rights," may direct the Institutional Trustee to enforce its rights
under the Junior Subordinated Debt Securities. If the Institutional Trustee
fails to enforce its rights under the Junior Subordinated Debt Securities, any
holder of Preferred Securities may institute a legal proceeding against Textron
to enforce the Institutional Trustee's rights under the Junior Subordinated Debt
Securities without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of Textron to pay interest or
principal on the Junior Subordinated Debt Securities on the date such interest
or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities may institute a Direct
Action for payment on or after the respective due date specified in the Junior
Subordinated Debt Securities. In connection with such Direct Action, Textron
will be subrogated to the rights of such holder of Preferred Securities under
the Declaration to the extent of any payment made by Textron to such holder of
Preferred Securities in such Direct Action. Textron, under the Guarantee,
acknowledges that the Guarantee Trustee shall enforce the Guarantee on behalf of
the holders of the Preferred Securities. If Textron fails to make payments under
the Guarantee, the Guarantee provides a mechanism whereby the holders of the
Preferred Securities may direct the Guarantee Trustee to enforce its rights
thereunder. If the Guarantee Trustee fails to enforce the Guarantee, any holder
of Preferred Securities may institute a legal proceeding directly against
Textron to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against Textron Capital, the Guarantee
Trustee, or any other person or entity.
Textron and Textron Capital believe that the above mechanisms and
obligations, taken together, are equivalent to a full and unconditional
guarantee by Textron of payments due on the Preferred Securities. See
"Description of Trust Guarantees -- General" in the accompanying Prospectus.
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UNITED STATES FEDERAL INCOME TAXATION
GENERAL
In the opinion of Skadden, Arps, Slate, Meagher & Flom, special tax counsel
to Textron and Textron Capital, the following is a summary of the material
United States federal income tax consequences of the purchase, ownership and
disposition of Preferred Securities. Unless otherwise stated, this summary deals
only with Preferred Securities held as capital assets by holders who purchase
the Preferred Securities upon original issuance ("Initial Holders"). It does not
deal with special classes of holders such as banks, thrifts, real estate
investment trusts, regulated investment companies, insurance companies, dealers
in securities or currencies, tax-exempt investors, persons that have a
functional currency other than the U.S. Dollar or persons that will hold the
Preferred Securities as a position in a "straddle," as part of a "synthetic
security" or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset. Further, it does not include any
description of any alternative minimum tax consequences or the tax laws of any
state or local government or of any foreign government that may be applicable to
the Preferred Securities. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
In connection with the issuance of the Junior Subordinated Debt Securities,
Skadden, Arps, Slate, Meagher & Flom, special tax counsel to Textron and Textron
Capital, will render its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the Indenture (and
certain other documents), and based on certain facts and assumptions contained
in such opinion, the Junior Subordinated Debt Securities held by Textron Capital
will be classified for United States federal income tax purposes as indebtedness
of Textron.
CLASSIFICATION OF TEXTRON CAPITAL
In connection with the issuance of the Preferred Securities, Skadden, Arps,
Slate, Meagher & Flom, special tax counsel to Textron and Textron Capital, will
render its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration and the Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, Textron Capital will be classified for United States
federal income tax purposes as a grantor trust and not as an association taxable
as a corporation. Accordingly, for United States federal income tax purposes,
each holder of Preferred Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Debt Securities, and each holder
will be required to include in its gross income any OID accrued with respect to
its allocable share of those Junior Subordinated Debt Securities.
ORIGINAL ISSUE DISCOUNT
Because Textron has the option, under the terms of the Junior Subordinated
Debt Securities, to defer payments of interest by extending interest payment
periods for up to 20 quarters, all of the stated interest payments on the Junior
Subordinated Debt Securities will treated as "original issue discount." However,
if the "issue price" of the Junior Subordinated Debt Securities for federal
income tax purposes is higher or lower than their $25 principal amount, the
total amount of OID reportable by any holder may differ from the amount of
stated interest. Holders of debt instruments issued with OID must include that
discount in income on an economic accrual basis before the receipt of cash
attributable to the interest, regardless of their method of tax accounting.
Generally, all of a holder's taxable interest income with respect to the Junior
Subordinated Debt Securities will be accounted for as OID, and actual
distributions of stated interest will not be reported as taxable income. The
amount of OID that accrues in any month will approximately equal the amount of
the interest that accrues on the Junior Subordinated Debt Securities in that
month at the stated interest rate unless the "issue price" is higher or lower
than $25. In the event that the interest payment period is extended, holders
will accrue OID on a current basis in an aggregate amount approximately equal to
the amount of the
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interest payment due at the end of the extended interest payment period
(including Compound Interest) on an economic accrual basis over the length of
the extended interest period and any holders who dispose of Preferred Securities
prior to the record date for the payment of interest following such extended
interest payment period will not receive from Textron Capital any cash related
thereto.
Because income on the Preferred Securities will constitute OID, corporate
holders of Preferred Securities will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Preferred
Securities.
MARKET DISCOUNT AND BOND PREMIUM
Holders of Preferred Securities other than Initial Holders may be
considered to have acquired their undivided interests in the Junior Subordinated
Debt Securities with market discount or acquisition premium as such phrases are
defined for United States federal income tax purposes. Such holders are advised
to consult their tax advisors as to the income tax consequences of the
acquisition, ownership and disposition of the Preferred Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF
TEXTRON CAPITAL
Under certain circumstances, as described under the caption "Description of
the Preferred Securities -- Special Event Redemption or Distribution," Junior
Subordinated Debt Securities may be distributed to holders in exchange for the
Preferred Securities and in liquidation of Textron Capital. Under current law,
such a distribution, for United States federal income tax purposes, would be
treated as a non-taxable event to each holder, and each holder would receive an
aggregate tax basis in the Junior Subordinated Debt Securities equal to such
holder's aggregate tax basis in its Preferred Securities. A holder's holding
period in the Junior Subordinated Debt Securities so received in liquidation of
Textron Capital would include the period during which the Preferred Securities
were held by such holder.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Junior Subordinated Debt Securities may be redeemed
for cash and the proceeds of such redemption distributed to holders in
redemption of their Preferred Securities. Under current law, such a redemption
would, for United States federal income tax purposes, constitute a taxable
disposition of the redeemed Preferred Securities, and a holder could recognize
gain or loss as if it sold such redeemed Preferred Securities for cash. See
"United States Federal Income Taxation -- Sales of Preferred Securities."
SALES OF PREFERRED SECURITIES
A holder that sells Preferred Securities will be considered to have
disposed of all or part of its pro rata share of the Junior Subordinated Debt
Securities, and will recognize gain or loss equal to the difference between its
adjusted tax basis in the Preferred Securities and the amount realized on the
sale of such Preferred Securities. A holder's adjusted tax basis in the
Preferred Securities generally will be its initial purchase price increased by
OID previously includible in such holder's gross income to the date of
disposition and decreased by payments received on the Preferred Securities. Such
gain or loss generally will be a capital gain or loss (except to the extent of
any accrued market discount with respect to such holder's pro rata share of the
Junior Subordinated Debt Securities not previously included in income -- see
"Market Discount and Bond Premium" above) and generally will be a long-term
capital gain or loss if the Preferred Securities have been held for more than
one year.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debt Securities. A holder who disposes of his Preferred
Securities between record dates for payments of distributions thereon will be
required to include accrued but unpaid interest on the Junior Subordinated Debt
Securities to the date of disposition in income as ordinary income, and to add
such amount to his adjusted tax basis in his pro rata share of the underlying
Junior Subordinated Debt Securities deemed disposed of. To the extent the
selling price is less than the holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest) a holder
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<PAGE> 33
will recognize a capital loss. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes.
PROPOSED TAX LEGISLATION
On December 7, 1995, as part of President Clinton's Seven-Year Balanced
Budget Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that would treat certain debt instruments issued on or after
December 7, 1995, including debt instruments such as the Junior Subordinated
Debt Securities, as equity for United States federal income tax purposes.
However, on December 19, 1995, the Treasury Department stated its intention to
include as part of the Proposed Legislation transition relief for debt
instruments issued pursuant to a registration statement filed with the SEC on or
before December 7, 1995, to the extent of the aggregate amount of such debt
instruments described in the registration statement. Based on the Treasury
Department's statement, it is expected that the Proposed Legislation, if enacted
without substantial modifications, would not apply to the Junior Subordinated
Debt Securities. There can be no assurances, however, that the Proposed
Legislation, if enacted, will include transition relief applicable to the Junior
Subordinated Debt Securities or that other legislation enacted after the date
hereof will not otherwise adversely affect the tax treatment of the Junior
Subordinated Debt Securities, result in the distribution of the Junior
Subordinated Debt Securities to holders of the Trust Securities or, in certain
limited circumstances, the redemption of such securities by Textron. See
"Description of Preferred Securities -- Special Event Redemption or
Distribution."
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership, or a non-resident fiduciary of a foreign estate or trust.
Under present United States federal income tax law: (i) payments by Textron
Capital or any of its paying agents to any holder of a Preferred Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that, (a) the beneficial owner of the
Preferred Security does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of Textron entitled to vote,
(b) the beneficial owner of the Preferred Security is not a controlled foreign
corporation that is related to Textron through stock ownership, and (c) either
(A) the beneficial owner of the Preferred Security certifies to Textron Capital
or its agent, under penalties of perjury, that it is not a United States holder
and provides its name and address or (B) a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "Financial Institution"), and holds
the Preferred Security in such capacity, certifies to Textron Capital or its
agent, under penalties of perjury, that such statement has been received from
the beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes Textron Capital or its agent with a copy thereof;
and (ii) a United States Alien Holder of a Preferred Security will not be
subject to United States federal withholding tax on any gain realized upon the
sale or other disposition of a Preferred Security.
INFORMATION REPORTING TO HOLDERS
Subject to the qualifications discussed below, income on the Preferred
Securities will be reported to holders on Forms 1099, which forms should be
mailed to holders of Preferred Securities by January 31 following each calendar
year.
Textron Capital will be obligated to report annually to Cede & Co., as
holder of record of the Preferred Securities, the OID related to the Junior
Subordinated Debt Securities that accrued during the year. Textron Capital
currently intends to report such information on Form 1099 prior to January 31
following each calendar year even though Textron Capital is not legally required
to report to record holders until April 15 following each calendar year. The
Underwriters have indicated to Textron Capital that, to the extent that they
hold Preferred Securities as nominees for beneficial holders, they currently
expect to report to such beneficial holders on Forms 1099 by January 31
following each calendar year. Under current law, holders of Preferred Securities
who hold as nominees for beneficial holders will not have any obligation to
report information
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<PAGE> 34
regarding the beneficial holders to Textron Capital. Textron Capital, moreover,
will not have any obligation to report to beneficial holders who are not also
record holders. Thus, beneficial holders of Preferred Securities who hold their
Preferred Securities through the Underwriters will receive Forms 1099 reflecting
the income on their Preferred Securities from such nominee holders rather than
Textron Capital.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will be allowed
as a credit against the holder's United States federal income tax, provided the
required information is provided to the Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
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<PAGE> 35
UNDERWRITING
Under the terms and subject to the conditions of the Underwriting Agreement
dated , 1996, each Underwriter named below has severally agreed to
purchase from the Trust, and the Trust has agreed to sell to such Underwriter,
the number of Preferred Securities set forth opposite the name of such
Underwriter below.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER PREFERRED SECURITIES
-------------------------------------------------------------------- --------------------
<S> <C>
Smith Barney Inc. ..................................................
---------
Total.....................................................
=========
</TABLE>
The Underwriters are obligated to take and pay for the total number of
Preferred Securities offered hereby if any such Preferred Securities are
purchased. In the event of default by any Underwriter, the Underwriting
Agreement provides that, in certain circumstances, purchase commitments of the
non-defaulting Underwriters may be increased or the Underwriting Agreement may
be terminated.
The Underwriters have advised the Trust that they propose initially to
offer the Preferred Securities to the public at the Initial Public Offering
Price set forth on the cover page of this Prospectus Supplement, and to certain
dealers at a price that represents a concession not in excess of per
Preferred Security. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of per Preferred Security to certain other
dealers. After the Preferred Securities are released for sale to the public, the
public offering price and such concessions may be changed by the Underwriters.
The Underwriters have in the past provided, and may in the future provide,
investment banking services to the Company.
The Underwriting Agreement provides that the Trust and Textron will
indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, and to make certain
contributions in respect thereof.
The Trust and Textron have agreed, during the period beginning on the date
of the Underwriting Agreement and continuing to and including the date that is
days after the closing date for the purchase of the Preferred Securities, not
to offer, sell, contract to sell or otherwise dispose of any preferred
securities, any preferred stock or any other securities (including any backup
undertakings) of Textron or Preferred Securities of the Trust, in each case that
are substantially similar to the Preferred Securities, or any securities
convertible into or exchangeable for the Preferred Securities or such
substantially similar securities of either the Trust or Textron, without the
prior written consent of Smith Barney Inc.
LEGAL MATTERS
The validity of the Junior Subordinated Debt Securities, the Guarantee and
certain matters relating thereto will be passed upon on behalf of Textron by
Michael D. Cahn, Assistant General Counsel -- Corporate of Textron. The validity
of the Preferred Securities and certain matters relating thereto will be passed
upon on behalf of Textron Capital by Skadden, Arps, Slate, Meagher & Flom, New
York, New York. Certain legal matters will be passed upon for the Underwriters
by Davis Polk & Wardwell, New York, New York. Certain United States federal
income taxation matters will be passed upon for Textron and Textron Capital by
Skadden, Arps, Slate, Meagher & Flom, New York, New York.
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<PAGE> 36
===============================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY TEXTRON
INC., TEXTRON CAPITAL I OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF TEXTRON INC. OR TEXTRON CAPITAL
I SINCE THE DATE HEREOF.
------------------------
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company........................... S-4
Textron Capital I..................... S-5
Risk Factors.......................... S-6
Textron Inc. Summary Financial Data... S-11
Capitalization of Textron Parent
Company Borrowing Group............. S-13
Ratio of Income to Fixed Charges...... S-14
Accounting Treatment.................. S-14
Use of Proceeds....................... S-14
Description of the Preferred
Securities.......................... S-15
Description of the Junior Subordinated
Debt Securities..................... S-25
Effect of Obligations Under the Junior
Subordinated Debt Securities and the
Guarantee........................... S-29
United States Federal Income
Taxation............................ S-31
Underwriting.......................... S-35
Legal Matters......................... S-35
PROSPECTUS
Available Information.................
Incorporation of Certain Documents by
Reference...........................
Textron Inc. .........................
Textron Trusts........................
Textron Finance, L.P. ................
Use of Proceeds.......................
Description of Debt Securities........
Description of Trust Preferred
Securities..........................
Description of Trust Guarantees.......
Description of Partnership Preferred
Securities..........................
Description of Partnership
Guarantee...........................
Plan of Distribution..................
Legal Opinions........................
Experts...............................
===============================================================================
</TABLE>
===============================================================================
PREFERRED SECURITIES
TEXTRON CAPITAL I
% TRUST PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
TEXTRON INC.
[LOGO TEXTRON]
------------
PROSPECTUS SUPPLEMENT
DATED , 1996
------------
SMITH BARNEY INC.
===============================================================================
