___________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 30,1995
Commission File Number 1-5480
Textron Inc.
(Exact name of registrant as specified in charter)
Delaware 05-0315468
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
40 Westminster Street, Providence, R.I. 02903
(401) 421-2800
(Address and telephone number of principal executive
offices)
______________
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Name of Each Exchange on
Which Registered
Common Stock - par value $0.125;
(85,978,117 shares outstanding at New York Stock Exchange
March 1, 1996) Pacific Stock Exchange
Preferred Stock Purchase Rights Chicago Stock Exchange
$2.08 Cumulative Convertible New York Stock Exchange
Preferred Stock, Series A-
no par value
$1.40 Convertible Preferred
Dividend Stock, Series B
(preferred only as to dividends) -
no par value New York Stock Exchange
9.25% Debentures due March 15, 2016 New York Stock Exchange
8.75% Debentures due July 1, 2022
7.92% Trust Preferred Securities of New York Stock Exchange
Subsidiary Trust (and Textron Guaranty
with respect thereto)
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has
been subject to such filing requirements for the past 90
days. Yes X . No .
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of voting stock held by
non-affiliates of the registrant is $6,886,686,124 as of
March 1, 1996.
Portions of Textron's Annual Report to
Shareholders for the fiscal year ended December 30,
1995 are incorporated by reference in Parts I and II of
this Report. Portions of Textron's Proxy Statement for
its Annual Meeting of Shareholders to be held on April 24,
1996 are incorporated by reference in Part III of this
Report.
__________________________________________________
<page2>
PART I
ITEM 1. BUSINESS OF TEXTRON*
Textron is a global multi-industry company with
operations in six business segments - Aircraft, Automotive,
Industrial, Systems and Components, Finance and Paul Revere. A
listing of the Divisions within each business segment, including a
description of the product lines of each Division, is incorporated
herein by reference to pages 53 through 55 of Textron's 1995
Annual Report to Shareholders. Financial information by business
segment and geographic area is incorporated herein by reference to
pages 22 and 49 of Textron's 1995 Annual Report to Shareholders.
Additional information regarding each business segment and Textron
in general is set forth below.
Business Segments
Aircraft. The Aircraft segment consists of Bell Helicopter
and The Cessna Aircraft Company. Based on unit sales, Bell
Helicopter is the largest supplier of helicopters, spare parts and
helicopter-related services in the world. Since it was founded in
1946, Bell has delivered over 33,000 aircraft to military and
civilian customers in over 120 countries. Bell has four military
and seven civilian helicopter models in current production. Its
aircraft are turbine powered, and range in size from the five
place Bell Model 206 series to the Bell Model 412P aircraft,
which carries up to fifteen people.
Bell's military business includes both U.S. Government and
non-U.S. Government customers. There are more helicopters in field
service in the inventory of the U.S. Government manufactured by
Bell than by any other helicopter company. Currently, Bell is
supplying advanced military helicopters, spare parts and product
support to the U.S. and Canadian Governments and to the
governments of several countries in the Pacific Rim, Middle East
and Europe. Military sales to non-U.S. customers are made only
with the concurrence of the U.S. Government.
Bell is also a leading supplier of commercially-certified
helicopters, with a market share of approximately 50% of current
deliveries to charter, offshore, utility, police, fire, rescue and
emergency medical helicopter operators. Bell's non-U.S.
Government business (including non-U.S. military customers)
typically represents 40% to 60% of its annual sales. In 1995,
such sales accounted for 48% of Bell's business.
____________________
* Reference herein to "Textron" includes Textron Inc., its
divisions and subsidiaries. A Textron "Division" is an operating
unit which may be comprised of an unincorporated division of
Textron, a subsidiary of Textron, or an unincorporated division of
a subsidiary.
<PAGE>3
Bell is teamed with the Helicopter Division of the Boeing
Company in the development of the V-22 Osprey tiltrotor aircraft
for the U.S. Department of Defense. Tiltrotor aircraft are
designed to utilize the benefits of both helicopters and fixed-
wing aircraft. Production of V-22 aircraft is expected to begin
in late 1996 or early 1997. In addition, Bell is developing an
unmanned tiltrotor under contract with the Department of Defense.
Bell will introduce two new civilian helicopter models in
1996: the single-engine Bell Model 407 (a light helicopter), and
the twin-engine intermediate size Bell Model 430. Other
commercial products and product improvements continue to be
developed.
In the light and medium helicopter market, Bell Helicopter
has two major U.S. competitors and one major European competitor.
Certain of its competitors are substantially larger and more
diversified aircraft manufacturers. Bell Helicopter markets its
products worldwide through its own sales force as well as through
independent representatives. Price, financing terms, aircraft
performance, reliability and product support are significant
factors in the sale of helicopters. Bell has developed the
world's largest distribution system to sell and support
helicopters, serving customers in over 120 countries. Revenues of
Bell Helicopter accounted for approximately 16%, 14% and 13% of
Textron's total revenues in 1995, 1994 and 1993, respectively.
The Cessna Aircraft Company is, based on unit sales, the
world's largest manufacturer of light and mid-size business jets
and single-engine utility turboprop aircraft. Cessna designs,
manufactures and sells general aviation aircraft, aircraft
propellers and related accessories worldwide. Based on units
shipped by manufacturers, Cessna's 1995 share of all
manufacturers' worldwide sales of light and midsize jets was 52%.
Cessna currently has two major product lines, Citation
business jets and single-engine turboprop Caravans. In addition,
Cessna has commenced construction of a manufacturing facility for
single-engine piston aircraft production in Independence, Kansas.
The Independence facility is scheduled to begin production in late
1996 and will produce Cessna Model 172, 182 and 206 aircraft,
orders for which are currently being taken.
The Cessna Caravan is the world's best selling utility
turboprop. The delivery of the 750th Caravan will occur in 1996.
Caravan deliveries have averaged over 60 aircraft per year since
the Caravan's introduction in 1982. Caravans are used in the
United States primarily to carry overnight express package
shipments. International uses of Caravans include commuter
airlines, relief flights, tourism and freight.
Cessna currently produces a family of Citation business jets
ranging from the Citation Jet to the Citation X. The Citation X
is the world's fastest business jet with a maximum operating speed
of Mach .92. Full certification of the Citation X is expected in
April 1996, with deliveries expected to commence in June 1996.
In addition, deliveries of the new Citation Bravo and Citation
Excel business jets will commence in 1997 and 1998, respectively.
<PAGE>4
Cessna markets its products worldwide primarily through its
own sales force as well as through a network of authorized
independent sales representatives. Cessna has five major
competitors for its business jet products, two U.S. and three
foreign. Cessna's aircraft compete with other aircraft that vary
in size, speed, range, capacity, handling characteristics and
price. Reliability and product support are significant factors in
the sale of these aircraft. Cessna provides its business jet
operators with factory-direct customer support offering 24 hour a
day service and maintenance. More than 40% of the worldwide
Citation fleet of 2,300 aircraft receive service through Cessna-
owned service centers. Cessna Caravan customers receive product
support through independently owned service stations and 24 hour
spare parts support through Cessna.
Automotive. The Automotive segment, organized under an
umbrella organization called Textron Automotive Company ("TAC"),
consists of the Textron Automotive Trim Operations, CWC Castings,
McCord Winn, Micromatic and Randall. These operations sell
primarily to automotive original equipment manufacturers and their
suppliers ("OEMs") operating in North America and, to a lesser
extent, in Europe.
Through its Textron Automotive Trim Operations, TAC is a
leading worldwide supplier of automotive interior and exterior
plastic components. Products include totally integrated interior
systems, including instrument panels, door and sidewall trim,
airbag doors, console assemblies, trim components, package trays,
armrests and headliner systems. In addition, TAC's trim facilities
manufacture painted fascias, body side moldings and claddings,
fender liners, lighting assemblies and structural composite bumper
beams. Revenues of the Textron Automotive Trim Operations
accounted for 13%, 13% and 10% of Textron's total revenues in
1995, 1994 and 1993, respectively.
TAC's other operations manufacture and sell a broad variety
of functional components. CWC Castings designs and manufactures
engine camshafts, balance shafts and vibration damper components.
McCord Winn manufactures seating comfort systems, windshield
washer systems and precision DC motors. Micromatic manufactures
machine tools used in the production of automobile engines for
precision bore and surface finishing, spline and gear production.
Randall produces fuel filler systems, tubular seat frames, metal
wheel covers and hub caps.
TAC is headquartered in Troy, Michigan and has over 30
facilities located in the United States, Canada, Mexico and the
United Kingdom. TAC's newly opened plant in Saltillo, Mexico,
provides components for the Dodge Ram pick-up truck. TAC also has
a 50% interest in a joint venture in the Netherlands for the
manufacture of instrument panels.
In 1995, TAC supplied on average approximately $116 in
components for every car and light truck built in North America.
<PAGE>5
More than 70 models currently carry parts made by TAC, including
Chrysler's Jeep Grand Cherokee and Voyager and Caravan mini-vans,
Ford's Lincoln Town Car and Windstar and Aerostar mini-vans, and
GM's Cadillac Seville, Cutlass Supreme and Pontiac Transport
minivan. TAC supplies almost $800 of components in every Chrysler
LH series car.
TAC's manufacturing operations are supported by a staff of
research and design specialists at TAC's Automotive Technology
Center. These specialists have developed new processes and
products, many of which are patented, that allow TAC to offer its
customers technology driven products and processes. In the
plastics and coatings area, TAC is a recognized leader in
alternative skin materials (including non-PVC materials), spray
urethane and cloth integration, energy management foam (including
impact and knee bolsters), the development of modular integrated
assemblies and vertical body panels, and High Crystalline
Polypropylene material for complete mold-in-color interior
components. CWC Castings is a leader in the design and manufacture
of automotive castings. It has developed a selective austempering
heat treatment process for ductile camshafts as well as a vacuum
casting system for hollow steel camshafts. McCord Winn is working
with OEMs worldwide to develop advanced technologies in areas such
as "intelligent" comfort seating systems, brushless motors and
carbon commutation for flexible fuel applications. Micromatic
machine tools are recognized throughout the world for their
cylindrical form generation and surface finishing capabilities.
In the automotive business, there is often a long lead time
from the time a supplier is selected to supply components on a new
car model to the time the supplier can first begin shipping
production parts. During this period, the supplier incurs
engineering and development costs. Until recently, the OEMs
reimbursed the supplier for these costs as incurred. Within the
last few years, the OEMs have begun to require that these costs be
recovered in the piece prices charged by the suppliers as the
goods are shipped. In addition, automotive OEMs often require
"just-in-time" delivery, so the manufacturer has to both plan
shipments in advance and hold inventory.
Automotive OEMs and their suppliers are the principal
customers of TAC. The only customers, the loss of which would
have a material adverse effect on TAC, are the U.S. based
automotive OEMs and their first-tier suppliers. However, because
of the broad range of products sold to such customers, it is
unlikely that such customers would cease all purchases from TAC.
Each of TAC's businesses faces competition from a number of
other manufacturers, based primarily on price, quality, reputation
and delivery. Although TAC is one of the largest manufacturers
offering its range of products and services, it faces strong
competition in all of its market segments. Because of the
diversity of products and services offered, no single company is a
competitor in all market segments. In certain markets, TAC also
competes for business with the OEMs' own operations.
<PAGE>6
Industrial. The Industrial segment consists of three major
product groups: Fastening Systems, Golf and Turf Care Equipment,
and Diversified Products.
The Fastening Systems Group consists of the Avdel, Camcar,
Cherry and Elco Divisions, which manufacture and sell fasteners,
fastening systems and installation tools to the aerospace,
appliance, automotive, business equipment, construction, do-it-
yourself, general industrial and transportation markets. Sales
are made to a wide range of customers, including OEMs,
distributors and consumers. Fasteners manufactured by the Group
include rivets, threaded and non-threaded fasteners and cold-
formed special fasteners, as well as assemblies which incorporate
such products with other products, such as metal stampings and
molded plastics. Elco was acquired by Textron in 1995, as was the
German-based Boesner unit of Camcar. In February 1996, Textron
announced that it had signed a definitive agreement to acquire
Valios Industries, a French based manufacturer of engineered
fastening systems, subject to European Commission approval.
Although the Fastening Systems Group is one of the largest
manufacturers of its products and services, there are hundreds of
competitors of the Fastening Systems Group ranging from small
proprietorships to multi-national companies. As is the case with
all Divisions of the Industrial segment, competition is based
primarily on price, quality, reputation and delivery. In
addition, larger customers of fastening systems tend to procure
products and services from the larger suppliers, except for
"niche" products which may be sourced from smaller companies. The
only customers, the loss of which would have a material adverse
effect on the Fastening Systems Group, are the U.S. automotive
OEMs and their first-tier suppliers. However, because of the
broad range of products sold to such customers, it is unlikely
that such customers will cease all purchases from the Fastening
Systems Group.
The Golf and Turf Care Equipment Group consists of the E-Z-GO
Division, which manufactures and sells electric powered and
gasoline powered golf cars and multipurpose utility vehicles, and
the Jacobsen Division, which manufactures and sells professional
mowing and turf maintenance equipment. The customers of the Golf
and Turf Care Equipment Group consist primarily of golf courses,
resort communities and commercial and industrial users such as
airports and factories. Sales are made directly through factory
branches, through a network of distributors and to end-users.
Many sales of golf and turf care equipment (both at the
distributor and end-user level) are financed through Textron
Financial Corporation, both for marketing purposes and as an
additional source of revenue to Textron.
The Diversified Products Group consists of Divisions
manufacturing a wide range of products, including double
enveloping worm gear speed reducers, gear motors and gear sets
(Cone Drive); powered equipment, electrical test instruments and
hand tools (Greenlee); and watch attachments and fashion jewelry
(Speidel). Products of the Diversified Products Group are sold to
a wide variety of customers, including OEMs, distributors and end-
users.
<PAGE>7
Systems and Components. The Systems and Components segment
consists of seven Divisions which serve both commercial and
military customers, primarily in aerospace markets, with an
extensive offering of systems, subsystems, components, materials
and services.
Fuel Systems designs, manufactures and overhauls gas turbine
engine injection and metering devices, fuel distribution valves,
and augmentor fuel injection systems for commercial and military
aircraft, and industrial, marine, and vehicular markets. OEM
sales are made directly to customers, and overhaul and repair
services are sold directly to domestic customers and through a
distributor for international customers. Fuel Systems invests in
the design and development of innovative, proprietary products,
provides on-site engineering support at customer facilities, and
maintains a state-of-the-art development laboratory to extend
customers' own design activities.
HR Textron ("HRT") designs and manufactures control systems
and components for aircraft, armored vehicles and commercial
applications. HRT markets its aerospace and defense products
directly to the U.S. Government and OEMs and, in the aftermarket,
both directly and through service centers. HRT has launched an
initiative to diversify its business base by adapting aerospace
technology to servovalves used in commercial and industrial
applications, including timber milling, molding machinery, test
equipment, and animated figures in entertainment theme parks. In
addition, HRT is working with several automotive manufacturers to
develop fast acting precision control products for active
suspension, power steering, and braking systems.
Textron Aerostructures designs and manufactures structural
assemblies for aircraft and space vehicles. The principal
products of Textron Aerostructures, which are marketed directly to
its customers, are wing components for the Airbus 330/340
aircraft, the empennage for the C130 military transport, the
empennage for the Bell/Boeing V-22 Osprey, the wings for the
Gulfstream GIV executive jet, and the nose cones and aft skirts
for the Titan IV booster.
Textron Lycoming is the world leader in the design,
manufacture and overhaul of reciprocating piston aircraft engines
serving the worldwide general aviation market, with a worldwide
market share of 80 percent of units sold. Textron Lycoming sells
new products directly to general aviation airframe manufacturers,
including Piper Aircraft, Robinson Helicopter and SOCATA, a
division of Aerospatiale, and will build the engines for Cessna's
new product line of single engine aircraft. Aftermarket sales
are made to the more than 180,000 existing owners of Textron
Lycoming products through a worldwide network of independently
owned distributors.
Textron Marine & Land Systems ("TM&LS") is a world leader in
the design and construction of advanced marine craft, including
air cushion vehicles, surface effect ships and rugged monohulls.
TM&LS's products also include light armored combat vehicles,
turrets, gun systems and advanced suspension systems. TM&LS's
products are in use in 35 countries by both military and
commercial customers. TM&LS's products are marketed directly in
the United States and through sales representatives and
distributors internationally. TM&LS has been awarded a production
contract from the U.S. Coast Guard for its 47' Motor Lifeboat and
a contract from the U.S. Army for the design and production of its
Armored Security Vehicle.
<PAGE>8
Textron Systems designs and manufactures products in three
primary areas: sensor fuzed munitions, surveillance systems and
aircraft landing systems. The focus of Textron Systems is on
real-time control systems _ products that sense their environment,
analyze and process data, make a decision, and take action in real
time. Sales are made primarily to the U. S. Department of
Defense, but Textron Systems also is applying its technologies to
several commercial products, including aircraft landing systems
and opto-electronic sensors. In February, 1996, Textron Systems
become responsible for the operations of the former Textron
Specialty Materials Division, which develops and manufactures high
strength, lightweight, advanced composite materials for aircraft,
automotive, industrial and sporting goods manufacturers, and fire
protection materials for oil and chemical companies worldwide.
Textron Systems generally sells its products directly to its
customers, but Specialty Materials products are also sold through
sales representatives and a small proportion of international
sales are made through sales representatives and distributors.
Turbine Engine Components is one of the world's largest
independent suppliers of internal components for gas turbine
engines for aircraft and industrial applications. Its products
include fan and compressor blades, vanes, shafts, disks, rotors,
blisks and other rotating components; the forgings from which
those products are machined; and stationary components of turbine
engines, such as frames, diffusers, and air collectors. Turbine
Engine Components manufactures its products to the specifications
of its customers, and most of its sales are made directly to its
customers.
The principal competitive factors affecting sales of the
products of the Systems and Components segment are price, quality,
customer service, performance, reliability, reputation and
existing product base. In the case of programs requiring a large
investment in inventory and tooling, such as those of Textron
Aerostructures, competitive factors also include a willingness to
invest in the customer's program.
Finance. The Finance segment consists of Avco Financial
Services ("AFS") and Textron Financial Corporation ("TFC").
AFS is primarily engaged in consumer finance and insurance
activities. AFS's finance operations mainly involve loans made by
the Avco Financial Services Group, consisting of consumer loans
which are unsecured or secured by personal property, real estate
loans secured by real property, and retail installment contracts,
principally covering personal property. AFS's insurance business
consists primarily of the sale of credit life, credit disability
and casualty insurance, offered through the Avco Insurance
Services Group, a significant part of which is directly related to
AFS's finance activities. AFS's consumer finance and insurance
activities are conducted through its nearly 1,200 finance offices
located in the United States, Australia, Canada, Hong Kong, New
Zealand, Spain and the United Kingdom. AFS's loan business is
regulated by laws that, among other things, generally limit
maximum charges for loans and the maximum amount and term thereof.
Such laws also require disclosure to customers of the interest
rate and other basic terms of most credit transactions and give
customers a limited right to cancel certain loans and retail
<PAGE>9
installment contracts without penalty. In addition, in certain
jurisdictions, its retail installment business is subject to
regulations that, among other things, limit the rates which may be
charged and require that certain disclosures be made to customers.
The insurance business is subject to licensing and regulation by
state authorities.
The consumer finance business is highly competitive, with
price and service being the principal competitive factors. AFS's
competitors include not only other companies operating under
consumer loan laws, but also other types of lending institutions
not so regulated and usually not limited in the size of their
loans, such as companies which finance the sale of their own
merchandise or the merchandise of others, industrial banks, the
personal loan departments of commercial banks and credit unions.
AFS's strongest competition is from commercial banks and credit
unions. The interest rates charged by these lenders are usually
lower than the rates charged by AFS. AFS's insurance businesses,
to the extent not related to AFS's finance activities, compete
with many other insurance companies offering similar products. In
January 1995, AFS purchased the stock of Household International,
Inc.'s Australian subsidiary, HFC of Australia Ltd., adding
approximately $436 million to AFS's finance receivable portfolio.
Revenues of AFS accounted for approximately 17%, 14% and 15% of
Textron's total revenues in 1995, 1994 and 1993, respectively.
TFC is a diversified commercial finance company specializing
in aircraft, golf and equipment financing and revolving credit
arrangements. TFC provides commercial financing for a wide range
of customers, including those who purchase or lease Textron
products and certain suppliers to Textron Divisions. TFC
presently offers its services primarily in the United States and,
to a lesser extent, in Europe and Canada, through its eight
business units. Each TFC business unit has a discrete market
focus and specific profit objectives and is staffed to provide
responsive services to its market. TFC's activities are subject
to a variety of federal and state regulations.
The businesses in which TFC operates are highly competitive.
TFC is subject to competition from various types of financing
institutions, including banks, investment banks, leasing
companies, insurance companies, independent finance companies
associated with manufacturers and public utilities, and finance
companies that are subsidiaries of banking institutions.
Competition within the commercial finance industry is primarily
focused on price and service.
<PAGE>10
Finance Receivables
The following table presents the Finance segment's outstanding
finance receivables by country:
December 31,
1995 1994
(In millions)
United States $6,750 $6,627
Australia 1,026 626
Canada 1,013 942
United Kingdom 632 613
Other countries 473 276
$9,894 $9,084
At December 31, 1995, finance receivables in the United
States represented 68% of Textron's total finance receivables
outstanding. At such date, no receivables outstanding in any one
state other than California exceeded 7% of the United States
portfolio. In California, outstanding receivables represented 16%
of the United States portfolio and 11% of the consolidated
portfolio.
Accrual of interest income is suspended for accounts which
are contractually delinquent by more than three months
(commercial) or three payments (consumer). Accrual of interest on
commercial loans is resumed, and suspended interest income is
recognized, when loans become contractually current, whereas
subsequent interest income on consumer loans is recognized when
collected. Nonearning consumer and commercial loans were $115
million and $99 million, respectively, at the end of 1995 and $82
million and $100 million, respectively, at the end of 1994.
<PAGE>11
The following table presents accruing loans on which one or
more installments were more than 60 days past due (expressed as a
percentage of the related gross receivables outstanding):
Years ended Consumer Commercial Total
December 31,
loans loans loans
1995 2.89% 0.24% 2.10%
1994 2.28% - 1.59%
The following table shows gross and net write-offs, the
percentages which those amounts bear to average finance
receivables, and the amount of the provision for losses charged to
income (less recoveries):
Gross write-offs Recoveries Net write-offs
Percentage from Percentage Provision
of average receivables of average for losses
Years ended finance previously finance less
December 31, Amount receivables written off Amount receivables recoveries
(In millions)
1995
Consumer $177 2.6% $33 $144 2.1% $149
Commercial 25 0.9% 4 21 0.7% 19
$202 2.1% $37 $165 1.7% $168
1994
Consumer $ 142 2.5% $ 28 $ 114 2.0% $ 136
Commercial 27 1.0% 3 24 0.4% 24
$ 169 2.0% $ 31 $ 138 1.6% $ 160
1993
Consumer $ 138 2.7% $ 26 $ 112 2.1% $ 121
Commercial 20 0.8% 3 17 0.7% 21
$ 158 2.0% $ 29 $ 129 1.7% $ 142
Paul Revere. Paul Revere, which is 83% owned by Textron, is
the leading provider of individual non-cancelable disability
insurance in the United States and Canada. In addition to its
individual disability insurance products, Paul Revere also
provides group disability, life and annuity products. Paul
<PAGE>12
Revere's products are marketed primarily through its brokerage
organization, its national accounts program and its career sales
agency system. Paul Revere is subject to regulation by the states
in which its insurance subsidiaries are domiciled or transact
business. In addition, Paul Revere's insurance subsidiaries are
subject to various regulatory restrictions on the maximum amount
of dividends and other payments that they can make to Paul Revere
without obtaining prior regulatory approval. Paul Revere operates
in a highly competitive environment. Insurance companies compete
on the basis of many factors, including financial strength,
pricing and other terms and conditions of products, commission
structure, perceived stability of the insurer, claims paying
ratings, service, name recognition and reputation.
Backlog
Information regarding Textron's backlog of government and
commercial orders by business segment at the end of the past two
fiscal years is contained on page 29 of Textron's 1995 Annual
Report to Shareholders, which page is incorporated herein by
reference.
Approximately 45% of Textron's total backlog at December 30,
1995, represents orders which are not expected to be filled within
the 1996 fiscal year. Approximately 60% of the total backlog is
funded.
Government Contracts
In 1995, 33% and 49% of the revenues of the Aircraft and the
Systems and Components segments, respectively, constituting 13% of
Textron's consolidated revenues, were generated by or resulted
from contracts with the United States Government. U.S. Government
business is subject to competition, changes in procurement
policies and regulations, the continuing availability of
Congressional appropriations, world events, and the size and
timing of programs in which Textron may participate.
A substantial portion of Textron's government contracts are
fixed-price or fixed-price incentive contracts. Contracts that
contain incentive pricing terms provide for upward or downward
adjustments in the prices paid by the U.S. Government thereunder
upon completion of the contract or any agreed portion thereof,
based on cost or other performance factors. U.S. Government
contracts generally may be terminated in whole or in part at the
convenience of the U.S. Government or if the contractor is in
default. Upon termination of a contract for the convenience of
the U.S. Government, the contractor is normally entitled to
reimbursement for allowable costs incurred (up to a maximum equal
to the contract price) and an allowance for profit or adjustment
for loss if the contractor would have incurred a loss had the
entire contract been completed. If, however, a contract is termi
nated for default: (i) the contractor is paid such amount as may
be agreed upon for manufacturing materials and partially completed
products accepted by the U.S. Government; (ii) the U.S. Government
is not liable for the contractor's costs with respect to
unaccepted items and is entitled to repayment of advance payments
and progress payments, if any, related to the terminated portions
of the contract; and (iii) the contractor may be liable for excess
costs incurred by the U.S. Government in procuring undelivered
items from another source.
<PAGE>13
Research and Development
Information regarding Textron's research and development
expenditures is contained on page 45 of Textron's 1995 Annual
Report to Shareholders, which page is incorporated herein by
reference.
Patents and Trademarks
Textron owns, or is licensed under, a number of patents and
trademarks throughout the world relating to methods of
manufacturing and products. Patents and trademarks have been of
value in the past and are expected to be of value in the future;
however, the loss of any single patent or group of patents would
not, in the opinion of Textron, materially affect the conduct of
its business.
Environmental Considerations
Textron's operations, like those of other companies engaged in
similar businesses, are subject to numerous laws and regulations
designed to protect the environment. Compliance with such laws
and expenditures for environmental control facilities have not
had, and are not expected to have, a material effect on capital
expenditures, earnings or the competitive position of Textron.
Additional information regarding environmental matters is
contained on pages 29, 38 and 48 of Textron's 1995 Annual Report
to Shareholders, which pages are incorporated herein by reference.
Employees
At December 30, 1995, Textron had approximately 57,000
employees.
ITEM 2. PROPERTIES
At December 30, 1995, Textron operated a total of 136 plants
located throughout the United States and 9 plants outside the
United States. Of the total of 145 plants, Textron owned 104 and
the balance was leased. In the aggregate, the total manufacturing
space was approximately 25 million square feet.
In addition, Textron owns or leases offices, warehouse and
other space at various locations throughout the United States and
outside the United States. Textron also owns or leases such
machinery and equipment as is necessary in the operation of its
Divisions. Textron considers the productive capacity of the
plants operated by each of its business segments to be adequate.
In general, the plants and machinery are in good condition, are
considered to be adequate for the uses to which they are being
put, and are substantially in regular use.
<PAGE>14
ITEM 3. LEGAL PROCEEDINGS
There are pending or threatened against Textron and its sub
sidiaries lawsuits and other proceedings, some of which allege
violations of federal government procurement regulations, involve
environmental matters, or are or purport to be class actions.
Among these suits and proceedings are some which seek
compensatory, treble or punitive damages in substantial amounts;
fines, penalties or restitution; or the remediation of allegedly
hazardous wastes; or which under federal government procurement
regulations could result in suspension or debarment of Textron or
its subsidiaries from U.S. Government contracting for a period of
time. On the basis of information presently available, Textron
believes that any liability for these suits and proceedings, or
the impact of the application of such government regulations,
would not have a material effect on Textron's net income or
financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of Textron's security
holders during the last quarter of the period covered by this
Report.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information
concerning the executive officers of Textron as of March 4, 1996.
Unless otherwise indicated, the employer is Textron.
Name Age Position
James F. Hardymon 61 Chairman since 1993, and Chief
Executive Officer since 1992;
formerly President, 1989
through 1993, and Chief
Operating Officer, 1989
through 1991; Director since
1989.
CORPORATE OPERATING MANAGEMENT
Lewis B. Campbell 49 President and Chief Operating
Officer since 1994; formerly
Executive Vice President and
Chief Operating Officer, 1992
to 1993; Vice President of
General Motors (1988 to 1992)
and General Manager of its GMC
Truck Division (1991 to 1992),
and General Manager of its
Flint Automotive Division
Buick - Oldsmobile - Cadillac
Group (1988 to 1991); Director
since 1994.
Harold K. McCard 64 Senior Vice President
Operations since August 1995;
formerly President of Textron
Systems Division, 1985 to
August 1995.
Herbert L. Henkel 47 President, Textron Industrial
Products since August 1995;
<PAGE>15
formerly Group Vice President,
Textron Inc., 1993 to August
1995; President of the
Greenlee Textron Division,
1987 to 1993.
Derek Plummer 62 Chairman, Textron Automotive
Company since April 1994;
formerly Group Vice President,
Textron Inc., 1986 to 1994.
Terry D. Stinson 54 President, Textron Systems and
Components since August 1995;
formerly Group Vice President,
Textron Inc., 1991 to August
1995; President of the
Hamilton Standard Division of
United Technologies
Corporation, 1986 to 1991.
CORPORATE STAFF MANAGEMENT
Mary L. Howell 43 Executive Vice President,
Government and International
since August 1995; formerly
Senior Vice President
Government and International
Relations 1993 to August 1995;
Vice President - Government
Affairs, 1985 to 1993.
Wayne W. Juchatz 49 Executive Vice President and
General Counsel since April
1995; formerly Executive Vice
President and General Counsel
of R.J. Reynolds Tobacco
Company, 1994 to 1995; and
Senior Vice President, General
Counsel and Secretary of R.J.
Reynolds Tobacco Company, 1987
to 1994.
Stephen L. Key 52 Executive Vice President and
Chief Financial Officer since
March 1995; formerly Executive
Vice President and Chief
Financial Officer of ConAgra,
Inc., 1992 to March 1995;
Managing Partner of the New
York office of Ernst & Young
(formerly Arthur Young), 1988
to 1992.
Richard A. McWhirter 61 Executive Vice President and
Corporate Secretary since
March 1995; formerly Executive
Vice President and Chief
Financial Officer, 1993 to
March 1995; Senior Vice
President and Secretary, 1991
to 1993; Senior Vice President
- Insurance and Environmental
Affairs, 1988 to 1991.
William F. Wayland 60 Executive Vice President
Administration and Chief Human
Resources Officer since
January 1993; formerly
Executive Vice President -
Human Resources, 1989 to
January 1993.
Richard A. Watson 51 Senior Vice President and
Treasurer since October 1995;
formerly Senior Vice
President, Financial Services,
August 1995 to October 1995;
Group Vice President, 1990 to
August 1995.
<PAGE>16
Carl D. Burtner 53 Vice President - Human
Resources since September
1995; also served as Acting
President of Speidel Textron,
September 1995 to January
1996; formerly President of
Greenlee Textron, 1993 to
September 1995; Vice President
Operations of Greenlee
Textron, 1991 to 1993; and
Vice President, Administration
of Greenlee Textron, 1985 to
1991.
Peter B. S. Ellis 42 Vice President Strategic
Planning since March 1995;
formerly Managing Director,
Telecommunications Practice of
Arthur D. Little, Inc., 1991
to March 1995; Vice President,
Business Development of Contel
Corporation, 1988 to 1991.
Douglas A. Fahlbeck 50 Vice President - Mergers and
Acquisitions since August
1995; formerly Executive Vice
President, Chief Financial
Officer and Director of
Textron Financial Corporation,
1994 to August 1995; Senior
Vice President and Chief
Financial Officer of Textron
Financial Corporation, 1985 to
1994.
Arnold M. Friedman 53 Vice President and Deputy
General Counsel since 1984.
William B. Gauld 42 Vice President - Corporate
Information Management and
Chief Information Officer
since August 1995; formerly
Staff Vice President,
Corporate Information
Management and Chief
Information Officer, 1994 to
August 1995; Chief Information
Officer of General Electric
(Electrical Distribution and
Control business) 1992 to
1994; Manager, Manufacturing
Systems of General Electric
(Appliances), 1989 to 1992.
Gregory E.Hudson 49 Vice President - Taxes since
1987.
William P. Janovitz 53 Vice President - Financial
Reporting since October 1995;
formerly Vice President and
Controller, 1983 to October
1995.
Mary F. Lovejoy 40 Vice President - Investor
Relations since August 1995;
formerly Director of Investor
Relations, 1993 to August
1995; Vice President and
Senior Corporate Banker of The
First National Bank of
Chicago, 1991 to 1993; Vice
President and Senior
Transaction Manager of The
First National Bank of
Chicago, 1989 to 1991.
Frank W. McNally 56 Vice President - Employee
Relations and Benefits since
August 1995; formerly Staff
Vice President, Employee
Relations and Benefits, 1993
to August 1995, Staff Vice
President Employee Relations,
1992 to 1993; Director,
Employee Relations, 1991 to
1992.
<PAGE>17
Gero K.H. Meyersiek 49 Vice President - International
since February 1996; formerly
Vice President of Textron
International Inc., February
1995 to February 1996; Vice
President, International
Business Development of GE
Financial Services, 1991 to
1994; Managing Director,
European Business Development
of GE Financial Services, 1988
to 1991.
Daniel L. Shaffer 59 Vice President Audit and
Business Ethics since November
1994; formerly President of
Textron's Aircraft Engine
Components Division, 1992 to
November 1994; Vice President
Finance of the Textron Systems
Division, 1984 to 1992.
Richard F. Smith 57 Vice President - Government
Affairs since August 1995;
Staff Vice President -
Government Affairs, March 1995
to August 1995; Director -
Government Affairs, 1985 to
March 1995.
Richard L. Yates 45 Vice President and Controller
since November 1995; formerly
Executive Vice President,
Chief Financial Officer and
Treasurer of Paul Revere, 1994
to November 1995; Senior Vice
President, Chief Financial
Officer and Treasurer of Paul
Revere, 1991 to 1994.
John F. Zugschwert 62 Vice President - Government
Marketing since August 1995;
Staff Vice President,
Washington Operations 1993 to
August 1995; Vice President,
Washington Operations of Bell
Helicopter Textron, 1991 to
1993.
No family relationship exists between any of the individuals
named above.
PART II
ITEM 5. MARKETS FOR THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
Textron's common stock is traded on the New York, Chicago and
Pacific Stock Exchanges. Additional information regarding
"Markets for the Registrant's Common Equity and Related
Stockholder Matters" is contained on pages 51 and 52 and on the
inside back cover of Textron's 1995 Annual Report to Shareholders,
which pages are incorporated herein by reference.
<PAGE>18
ITEM 6. SELECTED FINANCIAL DATA
Information regarding "Selected Financial Data" is contained
in the Five Year Summary on page 52 of Textron's 1995 Annual
Report to Shareholders, which page is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition
and Results of Operations is contained on pages 23 through 29 of
Textron's 1995 Annual Report to Shareholders, which pages are
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and the supplementary
information listed in the accompanying index to financial
statements and financial statement schedules are filed as part of
this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding Textron's directors is contained on
pages 2 through 6 and page 9 of Textron's Proxy Statement for the
Annual Meeting of Shareholders to be held on April 24, 1996, which
pages are incorporated herein by reference.
Information regarding Textron's executive officers is included
on pages 14 through 17 of Part I of this Report.
<PAGE>19
ITEM 11. EXECUTIVE COMPENSATION
Information regarding "Executive Compensation" is contained on
pages 10 through 20 of Textron's Proxy Statement for the Annual
Meeting of Shareholders to be held on April 24, 1996, which pages
are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Information regarding "Security Ownership of Certain
Beneficial Holders" and "Security Ownership of Management" is
contained on pages 8 and 9 of Textron's Proxy Statement for the
Annual Meeting of Shareholders to be held on April 24, 1996, which
pages are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related
transactions is contained on page 19 of Textron's Proxy Statement
for the Annual Meeting of Shareholders to be held on April 24,
1996, which page is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) Financial Statements and Schedules
The consolidated financial statements, supplementary
information and financial statement schedules listed in the
accompanying index to financial statements and financial statement
schedules are filed as part of this Report.
Exhibits
3.1 Restated Certificate of Incorporation of
Textron as filed March 24, 1988. Incorporated by
reference to Exhibit 3.1 to Textron's Annual Report
on Form 10-K for the fiscal year ended January 2,
1988.
3.2 By-Laws of Textron, restated December 10,
1992. Incorporated by reference to Exhibit 3.2 to
Textron's Annual Report on Form 10-K for the fiscal
year ended January 2, 1993.
<PAGE>20
NOTE: Exhibits 10.1 through 10.21 below are
management contracts or compensatory plans,
contracts or agreements.
10.1 Annual Incentive Compensation Plan For
Textron Employees.
10.2 Deferred Income Plan For Textron Key
Executives.
10.3 Severance Plan For Textron Key Executives.
10.4 Special Benefits for Textron Key Executives.
10.5 Supplemental Benefits Plan For Textron Key
Executives with Market Square Profit Sharing Plan
Schedule.
10.6 Supplemental Retirement Plan For Textron Key
Executives.
10.7 Survivor Benefit Plan For Textron Key Executives.
10.8A Textron 1982 Long-Term Incentive Plan ("1982
Plan"). Incorporated by reference to Exhibit
10.5(a) to Textron's Annual Report on Form 10-K for
the fiscal year ended December 31, 1988.
10.8B First Amendment to 1982 Plan. Incorporated by
reference to Exhibit 10.5(b) to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 3, 1987.
10.8C Second Amendment to 1982 Plan. Incorporated
by reference to Exhibit 10.5(c) to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 2, 1988.
10.9A Textron 1987 Long-Term Incentive Plan ("1987
Plan"). Incorporated by reference to Exhibit 10.6
to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989.
10.9B First Amendment to 1987 Plan. Incorporated
by reference to Exhibit 10.6(b) to Textron's Annual
Report on Form 10-K for the fiscal year ended
December 28, 1991.
10.10A Textron 1990 Long-Term Incentive Plan ("1990
Plan"). Incorporated by reference to Exhibit 10.7
to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989.
10.10B First Amendment to 1990 Plan. Incorporated by
reference to Exhibit 10.7(c) to Textron's Annual
Report on Form 10-K for the fiscal year ended
December 28, 1991.
10.10C Second Amendment to 1990 Plan. Incorporated
by reference to Exhibit 10.7(c) to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 2, 1993.
10.11 Textron 1994 Long-Term Incentive Plan.
Incorporated by reference to Exhibit 10 to
Textron's Quarterly Report on Form 10-Q for the
fiscal quarter ended July 2, 1994.
10.12 Form of Indemnity Agreement between Textron
and its directors and executive officers.
Incorporated by reference to Exhibit A to Textron's
Proxy Statement for its Annual Meeting of
Shareholders on April 29, 1987.
<PAGE>21
10.13A Pension Plan for Directors as amended by a
First Amendment. Incorporated by reference to
Exhibit 10.14 to Textron's Annual Report on Form 10-
K for the fiscal year ended December 31, 1988.
10.13B Second Amendment to Pension Plan for
Directors. Incorporated by reference to Exhibit
10.16(b) to Textron's Annual Report on Form 10-K
for the fiscal year ended December 29, 1990.
10.14 Deferred Income Plan for Textron Directors.
Incorporated by reference to Exhibit 10.18 to
Textron's Annual Report on Form 10-K for the fiscal
year ended January 1, 1994.
10.15A Employment Agreement between Textron and James
F. Hardymon dated November 24, 1989 ("Employment
Agreement"). Incorporated by reference to Exhibit
10.9 to Textron's Annual Report on Form 10-K for
the fiscal year ended December 30, 1989.
10.15B Amendment dated as of December 15, 1994 to
Employment Agreement. Incorporated by reference to
Exhibit 10.10B to Textron's Annual Report on Form
10-K for the fiscal year ended December 31, 1994.
10.16A Employment Agreement between Textron and Lewis B.
Campbell dated September 22, 1992. Incorporated
by reference to Exhibit 10.9 to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 2, 1993.
10.16B Retention Award granted to Lewis B. Campbell
on December 14, 1995.
10.17 Employment Agreement between Textron and Mary
L. Howell dated May 4, 1993. Incorporated by
reference to Exhibit 10.11 to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 1, 1994.
10.18 Employment Agreement between Textron and Wayne
W. Juchatz dated November 1, 1995.
10.19 Employment Agreement between Textron and
Stephen L. Key dated November 1, 1995.
10.20 Employment Agreement between Textron and
Richard A. McWhirter dated February 16, 1993.
Incorporated by reference to Exhibit 10.11 to
Textron's Annual Report on Form 10-K for the fiscal
year ended January 2, 1993.
10.21 Employment Agreement between Textron and
William F. Wayland dated January 1, 1989.
Incorporated by reference to Exhibit 10.12 to
Textron's Annual Report on Form 10-K for the fiscal
year ended December 30, 1989.
10.22A Credit Agreement dated as of November 1, 1993
among Textron, the Lenders listed therein and
Bankers Trust Company as Administrative Agent
("Credit Agreement"). Incorporated by reference to
Exhibit 10.20A to Textron's Annual Report on Form
10-K for the fiscal year ended January 1, 1994.
<PAGE>22
10.22B First Amendment dated as of October 30, 1994
to Credit Agreement. Incorporated by reference to
Exhibit 10.22B to Textron's Annual Report on Form
10-K for the fiscal year ended December 31, 1994.
10.22C Second Amendment to Credit Agreement dated as
of July 1, 1995. Incorporated by reference to
Exhibit (b) (3) to Schedule 14D-1 filed by Textron
on September 19, 1995.
12.1 Computation of ratio of income to fixed
charges of the Textron Parent Company Borrowing
Group.
12.2 Computation of ratio of income to fixed
charges of Textron Inc. including all
majority-owned subsidiaries.
13 A portion (pages 22 and following) of
Textron's 1995 Annual Report to Shareholders.
Except for pages or items specifically incorporated
by reference herein, such portion of Textron's 1995
Annual Report to Shareholders is furnished for the
information of the Commission and is not filed as
part of this Report.
21 Certain subsidiaries of Textron. Other
subsidiaries, which considered in the aggregate do
not constitute a significant subsidiary, are
omitted from such list.
23 Consent of Independent Auditors.
24.1 Power of attorney.
24.2 Certified copy of a resolution of the Board of
Directors of Textron.
27 Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter
of the period covered by this Report.
<PAGE>23
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly
caused this Annual Report on Form 10-K to be signed on its
behalf by the undersigned, thereunto duly authorized on this
14th day of March, 1996.
TEXTRON INC.
Registrant
By: /s/ Michael D. Cahn
Michael D. Cahn
Attorney-in-fact
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below on this 14th day of March,
1996, by the following persons on behalf of the registrant and in
the capacities indicated:
NAME TITLE
*
James F. Hardymon Chairman and Chief
Executive Officer,
Director (principal
*
Lewis B. Campbell President and Chief
Operating Officer, Director
*
H. Jesse Arnelle Director
*
R. Stuart Dickson Director
<PAGE>24
*
B.F. Dolan Director
*
Paul E. Gagne Director
*
John D. Macomber Director
*
Barbara Scott Preiskel Director
*
Brian H. Rowe Director
*
Sam F. Segnar Director
*
Jean Head Sisco Director
*
John W. Snow Director
*
Martin D. Walker Director
<PAGE>25
*
Thomas B. Wheeler Director
*
Stephen L. Key Executive Vice President and
Chief Financial Officer
(principal financial officer)
*
Richard L. Yates Vice President and Controller
(principal accounting
officer)
*By: /s/ Michael D. Cahn
Michael D. Cahn
Attorney-in-fact
<PAGE>26
TEXTRON INC.
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Item 14(a)
Form Annual Report
Textron Inc. 10-K to Shareholders
Report of Independent Auditors 31
Consolidated Statement of Income for each of the
three years in the period ended December 30, 1995 32
Consolidated Balance Sheet at December 30, 1995 and 33
December 31, 1994
Consolidated Statement of Cash Flows for each of 34
the three years in the period ended December 30,
1995
Consolidated Statement of Changes in Shareholders' 35
Equity for each of the three years in the period
ended December 30, 1995
Summary of Significant Accounting Policies 36-38
Notes to Consolidated Financial Statements 38-50
Revenues and Income by Business Segment 22
Supplementary Information (Unaudited):
Quarterly Financial Information 1995 and 1994 51
Financial Statement Schedules for each of the three
years in the period ended December 30, 1995
I Condensed financial information of 27
registrant
II Valuation and qualifying accounts 28
All other schedules are omitted because the conditions requiring
the filing thereof do not exist or because the information
required is included in the financial statements and notes
thereto.
<PAGE>27
TEXTRON INC.
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
For each of the three years in the period ended December 30, 1995
Financial information of the Registrant is omitted because
condensed financial information of the Textron Parent Company
Borrowing Group, which includes the Registrant and all of its
majority-owned subsidiaries other than its finance and insurance
subsidiaries, is shown on page 30 of Textron's 1995 Annual Report
to Shareholders. Management believes that the disclosure of
financial information on the basis of the Textron Parent Company
Borrowing Group results in a more meaningful presentation, since
this group constitutes the Registrant's basic borrowing entity and
the only restrictions on net assets of Textron's subsidiaries
relate to its finance and insurance subsidiaries. The
Registrant's investment in its finance and insurance subsidiaries
is shown on page 30 of Textron's 1995 Annual Report to
Shareholders under the caption "Investments in finance and
insurance subsidiaries."
The Textron Parent Company Borrowing Group received dividends
of $126 million, $115 million and $94 million from its finance and
insurance subsidiaries in 1995, 1994 and 1993, respectively. The
portion 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 30, 1995, approximately $376 million of their net
assets of $2.6 billion was available to be transferred to the
Textron Parent Company Borrowing Group pursuant to these
restrictions.
For information concerning the Textron Parent Company
Borrowing Group's long-term debt and restrictions contained in its
debt agreements, see Note 7 to the consolidated financial
statements appearing on pages 42-43 of Textron's 1995 Annual
Report to Shareholders.
<PAGE>28
TEXTRON INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For each of the three years in the period ended December 30, 1995
(In millions)
Allowance for credit losses
Changes in the allowance for credit losses for the years indicated
were as follows:
1995 1994 1993
Balance of the allowance for credit
losses at the biginning of the year $250 $225 $212
Add - charge to income:
Consumer 149 136 121
Commercial 19 24 21
168 160 142
Deduct - balances charged off:
Gross charge offs:
Consumer (177) (142) (138)
Commercial (25) (27) (20)
(202) (169) (158)
Recoveries:
Consumer 33 28 26
Commercial 4 3 3
37 31 29
Net charge offs (165) (138) (129)
Other 17 3 -
Balance of the allowance for credit
losses at the end of the year $ 270 $ 250 $ 225
Balance of the allowance for credit
losses at the end of the year applicable
to:
Consumer $ 195 $ 181 $ 155
Commercial 75 69 70
$ 270 $ 250 $ 225
<PAGE>28
TEXTRON INC.
Index of Exhibits
Annual Report on Form 10-K
for the Fiscal Year Ended December 31, 1994
Exhibits Description
3.1 Restated Certificate of Incorporation of
Textron as filed March 24, 1988. Incorporated by
reference to Exhibit 3.1 to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 2, 1988.
3.2 By-Laws of Textron, restated December 10,
1992. Incorporated by reference to Exhibit 3.2 to
Textron's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993.
NOTE: Exhibits 10.1 through 10.21 below are
management contracts or compensatory plans,
contracts or agreements.
10.1 Annual Incentive Compensation Plan For
Textron Employees.
10.2 Deferred Income Plan For Textron Key
Executives.
10.3 Severance Plan For Textron Key Executives.
10.4 Special Benefits for Textron Key
Executives.
10.5 Supplemental Benefits Plan For Textron Key
Executives with Market Square Profit Sharing
Plan Schedule.
10.6 Supplemental Retirement Plan For Textron Key
Executives.
10.7 Survivor Benefit Plan For Textron Key Executives.
10.8A Textron 1982 Long-Term Incentive Plan ("1982
Plan"). Incorporated by reference to Exhibit
10.5(a) to Textron's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988.
10.8B First Amendment to 1982 Plan. Incorporated
by reference to Exhibit 10.5(b) to Textron's
Annual Report on Form 10-K for the fiscal year
ended January 3, 1987.
10.8C Second Amendment to 1982 Plan. Incorporated
by reference to Exhibit 10.5(c) to Textron's
Annual Report on Form 10-K for the fiscal year
ended January 2, 1988.
10.9A Textron 1987 Long-Term Incentive Plan ("1987
Plan"). Incorporated by reference to Exhibit 10.6
to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989.
10.9B First Amendment to 1987 Plan. Incorporated
by reference to Exhibit 10.6(b) to Textron's
Annual Report on Form 10-K for the fiscal year
ended December 28, 1991.
10.10A Textron 1990 Long-Term Incentive Plan ("1990
Plan"). Incorporated by reference to Exhibit 10.7
to Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989.
10.10B First Amendment to 1990 Plan. Incorporated
by reference to Exhibit 10.7(c) to Textron's
Annual Report on Form 10-K for the fiscal year
ended December 28, 1991.
10.10C Second Amendment to 1990 Plan. Incorporated
by reference to Exhibit 10.7(c) to Textron's
Annual Report on Form 10-K for the fiscal year
ended January 2, 1993.
10.11 Textron 1994 Long-Term Incentive Plan.
Incorporated by reference to Exhibit 10 to
Textron's Quarterly Report on Form 10-Q for the
fiscal quarter ended July 2, 1994.
10.12 Form of Indemnity Agreement between Textron
and its directors and executive officers.
Incorporated by reference to Exhibit A to
Textron's Proxy Statement for its Annual Meeting
of Shareholders on April 29, 1987.
10.13A Pension Plan for Directors as amended by a
First Amendment. Incorporated by reference to
Exhibit 10.14 to Textron's Annual Report on Form
10-K for the fiscal year ended December 31, 1988.
10.13B Second Amendment to Pension Plan for
Directors. Incorporated by reference to Exhibit
10.16(b) to Textron's Annual Report on Form 10-K
for the fiscal year ended December 29, 1990.
10.14 Deferred Income Plan for Textron Directors.
Incorporated by reference to Exhibit 10.18 to
Textron's Annual Report on Form 10-K for the
fiscal year ended January 1, 1994.
10.15A Employment Agreement between Textron and
James F. Hardymon dated November 24, 1989
("Employment Agreement"). Incorporated by
reference to Exhibit 10.9 to Textron's Annual
Report on Form 10-K for the fiscal year ended
December 30, 1989.
10.15B Amendment dated as of December 15, 1994 to
Employment Agreement. Incorporated by reference
to Exhibit 10.10B to Textron's Annual Report on
Form 10-K for the fiscal year ended December 31,
1994.
10.16A Employment Agreement between Textron and Lewis B.
Campbell dated September 22, 1992. Incorporated
by reference to Exhibit 10.9 to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 2, 1993.
10.16B Retention Award granted to Lewis B. Campbell
on December 14, 1995.
10.17 Employment Agreement between Textron and Mary
L. Howell dated May 4, 1993. Incorporated by
reference to Exhibit 10.11 to Textron's Annual
Report on Form 10-K for the fiscal year ended
January 1, 1994.
10.18 Employment Agreement between Textron and
Wayne W. Juchatz dated November 1, 1995.
10.19 Employment Agreement between Textron and
Stephen L. Key dated November 1, 1995.
10.20 Employment Agreement between Textron and
Richard A. McWhirter dated February 16, 1993.
Incorporated by reference to Exhibit 10.11 to
Textron's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993.
10.21 Employment Agreement between Textron and
William F. Wayland dated January 1, 1989.
Incorporated by reference to Exhibit 10.12 to
Textron's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989.
10.22A Credit Agreement dated as of November 1, 1993
among Textron, the Lenders listed therein and
Bankers Trust Company as Administrative Agent
("Credit Agreement"). Incorporated by reference
to Exhibit 10.20A to Textron's Annual Report on
Form 10-K for the fiscal year ended January 1,
1994.
10.22B First Amendment dated as of October 30, 1994
to Credit Agreement. Incorporated by reference to
Exhibit 10.22B to Textron's Annual Report on Form
10-K for the fiscal year ended December 31, 1994.
10.22C Second Amendment to Credit Agreement dated as
of July 1, 1995. Incorporated by reference to
Exhibit (b) (3) to Schedule 14D-1 filed by Textron
on September 19, 1995.
12.1 Computation of ratio of income to fixed
charges of the Textron Parent Company Borrowing
Group.
12.2 Computation of ratio of income to fixed
charges of Textron Inc. including all
majority-owned subsidiaries.
13 A portion (pages 22 and following) of
Textron's 1995 Annual Report to Shareholders.
Except for pages or items specifically
incorporated by reference herein, such portion of
Textron's 1995 Annual Report to Shareholders is
furnished for the information of the Commission
and is not filed as part of this Report.
21 Certain subsidiaries of Textron. Other
subsidiaries, which considered in the aggregate do
not constitute a significant subsidiary, are
omitted from such list.
23 Consent of Independent Auditors.
24.1 Power of attorney.
24.2 Certified copy of a resolution of the Board of
Directors of Textron.
27 Financial Data Schedule.
ANNUAL INCENTIVE COMPENSATION PLAN FOR TEXTRON EMPLOYEES
This Plan is designed to provide financial incentives for
the successful achievement of pre-established financial and
non-financial objectives to selected officers and other
employees of Textron's Corporate Office.
This Plan as restated shall be effective from and after
January 1, 1994, except as otherwise provided.
Article I - Definitions
Whenever used in this document, the following terms shall
have the meanings set forth in this Article, unless a contrary
or different meaning is expressly provided:
1.01 "Beneficiary" means the person or persons entitled
under this Plan to receive Plan benefits after a Participant's
death.
1.02 "Benefits Committee" means the Benefits Committee
appointed by the Board.
1.03 "Board" means the Board of Directors of Textron.
1.04 "Incentive Compensation" means compensation from a
Textron Company for the successful achievement of pre-
established financial and non-financial objectives.
1.05 "Key Executive" means an employee of a Textron
Company who has been and continues to be designated as a Key
Executive under the Plan by the Chief Executive Officer and
Chief Human Resources Officer of Textron.
1.06 "Participant" means an employee who is participating
or has participated in this Plan.
1.07 "Plan" means this Annual Incentive Compensation Plan
for Textron Employees, as amended from time to time.
1.08 "Textron" means Textron Inc., a Delaware
corporation, and any successor of Textron Inc.
1.09 "Textron Company" means Textron or any company
controlled by or under common control with Textron.
1.10 "Textron Employment" means employment with a Textron
Company. Leaves of absence for such periods and purposes as
are approved by Textron and transfers of employment within or
between Textron Companies shall not be deemed interruptions of
Textron Employment.
Article II - Employees Eligible to Participate
2.01 Officers and other employees of Textron's Corporate
Office covered by Textron's Executive Compensation Structure
are eligible for selection as Participants. Participants are
approved by the Chief Executive Officer.
Article III - Partial Years of Plan Participation
3.01 In order to be eligible to receive Incentive
Compensation for a fiscal year, a Participant must be an
employee of Textron on the last day of that fiscal year.
However, if a Participant was employed for only part of a
fiscal year, the Participant or her beneficiary may receive
Incentive Compensation at the discretion of the Chief
Executive Officer.
Article IV - Factors in Determining Awards
4.01 The following factors will be taken into
consideration in determining the amount of Incentive
Compensation to be paid to a Participant:
(a) For each salary grade in Textron's Executive
Compensation Structure, Textron's Human Resources Department,
with the approval of the Chief Executive Officer of Textron,
will establish a specified percentage of Base Salary ("Target
Level Percentage") which, when multiplied by the Participant's
Base Salary, will yield the Participant's "Target Incentive
Compensation." "Base Salary" is the annual salary of a
Participant as of November 1 of the fiscal year to which an
award relates (or such other date as may be established by the
Chief Executive Officer), exclusive of overtime pay, bonuses,
incentive compensation, expense reimbursements or any other
compensation which supplements annual salary.
(b) A number of objectives ("Objectives") will be
established for each fiscal year. Objectives may be financial
or non-financial and will be related to individual, Division,
Group or overall Corporate performance. Corporate financial
Objectives and the Chief Executive Officer's non-financial
Objectives will be established by the Organization and
Compensation Committee of the Board subject to the approval of
the Board. All Objectives for Key Executives will be approved
by the Chief Executive Officer. Individual Objectives of each
other Participant will be approved by the senior officer
responsible for the Participant's function.
(c) For the purpose of establishing the relative
importance of Objectives, they may be assigned weighting
factors which may vary from Participant to Participant.
4.02 Each Participant's Incentive Compensation for a
fiscal year is based on the achievement of applicable
Objectives, his Target Incentive Compensation and any other
factors which Textron deems appropriate. The Incentive
Compensation of Key Executives will be approved by the
Organization and Compensation Committee or the Board, as
appropriate. Each other Participant's Incentive Compensation
will be approved by the Chief Executive Officer or his
designee.
4.03 If there is minimal achievement of individual,
Division, Group or Corporate Objectives, or if Textron or the
Participant performs below expectations, the Participant's
award will fall below her Target Incentive Compensation. If
Textron and a Participant substantially meet their Objectives
for the fiscal year, the Participant's award may equal or
exceed her Target Incentive Compensation. For outstanding
performance by Textron or the Participant, the Participant's
Incentive Compensation may range up to 200% of her Target
Incentive Compensation. Awards in excess of that level may be
granted for exceptional performance, at the discretion of the
Chief Executive Officer, the Organization and Compensation
Committee or the Board, as appropriate.
4.04 Notwithstanding any of the previous provisions of
this Plan, the Participant is not likely to receive Incentive
Compensation if Textron's achievement of financial Objectives
or the Participant's achievement of individual Objectives for
a fiscal year is unsatisfactory.
Article V - Payment and Accounting
5.01 A Participant's Incentive Compensation shall
generally be payable in cash within 60 days after the end of
the fiscal year for which it is paid. However, with respect to
any Participant who is a Key Executive, certain amounts of
Incentive Compensation may be payable in stock units, which
are fictional shares of Textron Common Stock accumulated and
accounted for under the Deferred Income Plan for Textron Key
Executives for the sole purpose of determining the cash amount
of any distribution on account of this portion of Incentive
Compensation.
5.02 Each Key Executive's Incentive Compensation shall be
payable in stock units and not in cash, to the extent her
Incentive Compensation exceeds 100% of her Target Incentive
Compensation for any fiscal year.
5.03 Textron shall credit stock units to a Key
Executive's stock unit account on the same date on which that
portion of his Incentive Compensation which is payable in cash
is, or would be but for its deferral, paid to him.
Article VI - Plan Administration
6.01 The Organization and Compensation Committee will be
responsible for interpreting the Plan, subject to the approval
of the Board. All such interpretations of the Organization and
Compensation Committee will be final, conclusive and binding
on all Participants. Subject to the foregoing, the Chief
Executive Officer of Textron or his designee will have
authority to administer the Plan.
Article VII - Miscellaneous
7.01 Unless a contrary or different meaning is expressly
provided, each use in this Plan of the masculine or feminine
gender shall include the other and each use of the singular
number shall include the plural.
7.02 No benefit payable at any time under this Plan shall
be subject in any manner to alienation, sale, transfer,
assignment, pledge or encumbrance of any kind unless
specifically approved in writing in advance by the Benefits
Committee. Any attempt to alienate, sell, transfer, assign,
pledge or otherwise encumber any such benefit, whether
presently or subsequently payable, shall be void unless so
approved. Except as required by law, no benefit payable under
this Plan shall in any manner be subject to garnishment,
attachment, execution or other legal process, or be liable for
or subject to the debts or liability of any Participant or
Beneficiary.
7.03 The Board or its designee shall have the right to
amend, modify, suspend or terminate this Plan at any time by
written ratification of such action. Individual, Division,
Group or Corporate Objectives, or the weighting of Objectives,
may be changed during the year with the approval of the
appropriate entity identified in Section 4.01(b).
Notwithstanding the foregoing, no action which is described in
the preceding paragraph and which is taken after a Change in
Control may affect adversely any Participant's rights under
this Plan, with respect to the fiscal year in which the Change
in Control occurs, without the Participant's express written
consent.
7.04 Notwithstanding any other provision of this Plan,
each individual who is a Participant on the day on which a
Change in Control of Textron occurs shall receive Incentive
Compensation for the fiscal year in which the Change in
Control occurs. Such Incentive Compensation shall equal or
exceed the greater of the Participant's (1) Target Incentive
Compensation for that year, or (2) most recent Incentive
Compensation award, such greater amount to be multiplied by
the number of months in which the Participant was an employee
during the year in which the Change in Control occurs, and
divided by 12.
For purposes of this Plan, a "Change in Control" shall occur
if (i) any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Act")) other than Textron, any trustee or other
fiduciary holding Textron Common Stock under an employee
benefit plan of Textron or a related company, or any
corporation which is owned, directly or indirectly, by the
stockholders of Textron in substantially the same proportions
as their ownership of Textron Common Stock, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act) of
more than 30% of the then outstanding voting stock of Textron,
or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board (and any new director whose election by the Board or
whose nomination for election by the stockholders of Textron
was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the
beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority thereof, or (iii) the stockholders of
Textron approve a merger or consolidation of Textron with any
other corporation, other than a merger or consolidation which
would result in the voting securities of Textron outstanding
imme-diately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 80% of the
combined voting power of the voting securities of Textron or
such surviving entity outstanding immediately after such
merger or consolidation, or (iv) the stockholders of Textron
approve a plan of complete liquidation of Textron or an
agreement for the sale or disposition by Textron of all or
substantially all of Textron's assets.
7.05 This Plan shall be construed in accordance with the
laws of the State of Delaware.
7.06 Nothing contained in this Plan shall be construed as
a contract of employment between any Participant and any
Textron Company, or to suggest or create a right in any
Participant to be continued in employment as a Key Executive
or other employee of any Textron Company.
7.07 Textron, the Chief Executive Officer and the Chief
Human Resources Officer, and the Benefits Committee may impose
such other lawful terms and conditions on participation in
this Plan as deemed desirable. The Chief Executive Officer,
the Chief Human Resources Officer and members of the Benefits
Committee may participate in this Plan.
IN WITNESS WHEREOF, Textron Inc. has caused this restated
Plan to be executed by its duly authorized officer to be
effective as of January 1, 1994.
TEXTRON INC.
By: /s/William F. Wayland
William F. Wayland
Executive Vice President
Administration and
Chief Human Resources Officer
Date: November 27, 1995
DEFERRED INCOME PLAN FOR TEXTRON KEY EXECUTIVES
This Plan has been established for the benefit of certain
Textron Key Executives to secure their goodwill, loyalty and
achievement and to attract to and retain in the employ of
Textron Companies persons of outstanding competence.
This Plan as restated shall be effective from and after
January 1, 1994, except as otherwise provided.
Article I - Definitions
Whenever used in this document, the following terms
shall have the meanings set forth in this Article, unless a
contrary or different meaning is expressly provided:
1.01 "Beneficiary" means the person or persons entitled
under this Plan to receive Plan benefits after a
Participant's death.
1.02 "Benefits Committee" means the Benefits Committee
appointed by the Board.
1.03 "Board" means the Board of Directors of Textron.
1.04 "Compensation" means base salary, annual incentive
compensation, cash distributions for performance units and
performance share units under a long term incentive
compensation plan, and any other item of gross salary from a
Textron Company designated as Compensation under this Plan
by the Benefits Committee or its designee.
1.05 "Deferral Period" means for a Participant (1) any
complete months remaining in the calendar year in which she
becomes a Key Executive, and (2) each succeeding calendar
year in which she is a Key Executive.
1.06 "Deferred Income" means any Compensation the
receipt of which is deferred under this Plan. "Automatic
Deferred Income" means amounts in excess of 100% of a
Participant's annual incentive compensation target.
"Elective Deferred Income" means amounts elected by the
Participant to be deferred under this Plan. "Discretionary
Deferred Income" means additional contributions made at
Textron's discretion to any account maintained for a
Participant under this Plan.
1.07 "Determination Date" means the last day of each
calendar month.
1.08 "Interest" means interest computed under Article
III of this Plan.
1.09 "Key Executive" means an employee of a Textron
Company who has been and continues to be designated as a Key
Executive under the Plan by the Chief Executive Officer and
Chief Human Resources Officer of Textron.
1.10 "Participant" means an employee who is
participating or has participated in this Plan.
1.11 "Participation Agreement" means an agreement in a
form prescribed by the Benefits Committee or its designee,
by which a Key Executive elects to defer the receipt of
Compensation pursuant to this Plan.
1.12 "Plan" means this Deferred Income Plan for Textron
Key Executives, as amended from time to time.
1.13 "Textron" means Textron Inc., a Delaware
corporation, and any successor of Textron Inc.
1.14 "Textron Company" means Textron or any company
controlled by or under common control with Textron.
1.15 "Textron Employment" means employment with a
Textron Company. Leaves of absence for such periods and
purposes as are approved by Textron and transfers of
employment within or between Textron Companies shall not be
deemed interruptions of Textron Employment.
1.16 "Total Disability" has the same meaning under this
Plan as in the Textron Pension Plan with respect to any
Participant at the date his Textron Employment ends.
Article II - Participation and Deferred Income
2.01 A Key Executive may participate in this Plan for a
Deferral Period by filing a Participation Agreement with the
Benefits Committee or its designee within the time specified
by that committee or designee.
2.02 For any complete calendar months remaining in the
calendar year in which a Participant becomes a Key
Executive, she may defer up to 100% of her Compensation
otherwise payable during those months. For any subsequent
Deferral Period, a Participant may defer up to 25% of her
base salary, and up to 100% of her Compensation other than
base salary, otherwise payable during that period. (For
purposes of this 25% limitation, "base salary" includes any
base salary the receipt of which by the Participant is
deferred under the Textron Savings Plan or this Plan.) A
Participant may not defer any Compensation which she has
earned at the time she files her Participation Agreement
relating thereto.
2.03 The Benefits Committee may, at a Participant's
request but in its sole discretion, suspend in whole or in
part a Participant's commitment under any Participation
Agreement for such time as it may deem necessary upon a
finding that the Participant has suffered a financial
hardship. For purposes of this Plan, a financial hardship
shall include, but not be limited to, an unexpected need for
cash arising from (1) an accident, illness or disability of,
(2) a casualty or theft loss suffered by, (3) the rendering
of a judgment against, or (4) a sudden financial reversal or
curtailment of income of a Participant or a family member or
dependent, or (5) the transfer of a Participant to another
place of employment.
2.04 If at any time a Participant shall cease to be a
Key Executive, his Participation Agreements and Deferral
Periods shall terminate at that time and no further Deferred
Income shall be withheld from his Compensation.
2.05 No Deferred Income, Interest or dividends shall be
payable to a Participant while he is employed by a Textron
Company.
2.06 Textron shall withhold for taxes or other reasons
as required by law.
Article III - Participant's Accounts, Interest, and Earnings
3.01(a) For record-keeping purposes only, Textron shall
maintain a Moody's Account and a Stock Unit Account or an
Interest Account for each Participant who has the receipt of
Compensation deferred under this Plan.
(b) Textron may in its sole discretion from time to
time make additional contributions to any account maintained
for a Participant. These additional contributions, if any,
may be subject to a vesting schedule set by the Benefits
Committee.
(c) The existence of these accounts shall not require
any segregation of assets.
(d) A Participant's right to receive Elective Deferred
Income shall always be nonfor-feitable.
3.02 The Moody's Account shall reflect a Participant's
investment in an interest-bearing account.
(a) The Moody's Account shall be adjusted as of each
Determination Date and shall consist of (1) the balance of
the Account as of the immediately preceding Determination
Date, (2) amounts of Deferred Income credited to the Account
in the intervening month, and (3) Interest earned since the
immediately preceding Determination Date based on one-
twelfth of the applicable interest rate(s) described in
Sections 3.03 or 3.04 on the average daily balance of the
Account (or portion thereof) during the intervening month;
reduced by (4) any distributions from the account (or
portion thereof) during the intervening month.
(b) The interest rates applicable to the Moody's
Account shall be the Moody's Rate and the Moody's Plus Rate.
3.03 The Moody's Rate shall be the greater of (1) the
average for the calendar month in which the applicable
Determination Date falls of the Moody's Corporate Bond Yield
Index as published by Moody's Investors Service, Inc. (or
any successor thereto), or, if such monthly yield is no
longer published, a substantially similar average selected
by the Benefits Committee, or (2) eight percent per year.
3.04(a) The Moody's Plus Rate applicable on a
Determination Date to any portion of the Moody's Account
which is attributable to Deferred Income deferred before
1988 shall be the greater of (1) the average described in
clause (1) of Section 3.03, plus three percentage points, or
(2) eleven percent per year.
(b) The Moody's Plus Rate applicable on a Determination
Date to any portion of the Moody's Account which is not
described in Section 3.04(a) shall be the greater of (1) the
average described in clause (1) of Section 3.03, plus two
percentage points, or (2) ten percent per year.
3.05 The Stock Unit Account shall consist of stock
units, which are fictional shares of Textron Common Stock,
accumulated and accounted for under this Plan for the sole
purpose of determining the cash amount of any distribution
on account of this portion of Deferred Income.
(a) Notwithstanding any Plan provision to the contrary,
not less than 50% of elected Deferred Income in years after
1995 must be deferred to the Stock Unit Account.
(b) Notwithstanding any Plan provision to the contrary,
100% of Automatic Deferred Income shall be deferred to the
Stock Unit Account.
3.06 The Stock Unit Account shall be adjusted as of
each Determination Date and shall consist of the stock units
(1) in the account as of the immediately preceding
Determination Date, (2) credited under Section 3.07 and 3.08
during the intervening month, and (3) credited under Section
3.09 during the intervening month.
3.07(a) To the extent that a Participant puts Elective
Deferred Income in the Stock Unit Account, the amount
initially credited to her Account shall equal 125% of such
Compensation.
(b) The amount in excess of 100% of the Elective
Deferred Income is the "Textron stock unit contribution." A
Participant's right to receive the Textron stock unit
contribution, as adjusted under Section 3.09, shall become
nonforfeitable according to this schedule:
(1) 50% on December 31 of the calendar year in which
that Elective Deferred Income otherwise would have been paid
to him, but only if his Textron Employment continues on that
December 31; and
(2) the remaining 50% on the next December 31, but only
if his Textron Employment continues on that next December
31.
(c) A Participant's right to receive her Textron stock
unit contribution shall be nonforfeitable in the event her
Textron employment ends because of disability or death.
(d) If a Participant's employment ends at a time she is
eligible for an early or normal retirement benefit under a
Textron salaried employees' pension plan, her Textron stock
unit contribution shall be nonforfeitable according to the
above schedule.
3.08 Each month Textron shall credit stock units to a
Participant's Stock Unit Account, equal in number to the
number of shares of Textron Common Stock that were or could
have been purchased at a price per share equal to the
average price per share of Textron Common Stock contributed
to the Textron Savings Plan as amended from time to time
(the "Savings Plan"), for that month or purchased by the
Savings Plan during that month, with the amount credited to
the Account for that month under 3.07(a).
3.09 From time to time, Textron shall credit Stock
Units to a Participant's Stock Unit Account equal in number
to the number of shares of Textron Common Stock that would
have been allocated on account of dividends to the
Participant's Stock Unit Account as of that date, based on
the average price per share of Textron Common Stock
contributed to the Savings Plan for that month or purchased
by the Savings Plan for that purpose during the month, if
the Stock Units credited to that Account instead had been
shares of Textron Common Stock.
3.10 The number of Stock Units credited to a
Participant's account under this Article III shall be
adjusted, without receipt of any consideration by Textron,
on account of any recapitalization, stock split, stock
dividend or similar increase or decrease affecting Textron
Common Stock, as if the Stock Units were actually shares of
Textron Common Stock.
3.11 The Interest Account shall be established when the
benefits relating to a Participant's Stock Unit Account
become due to the Participant under Article IV. The Interest
Account shall earn interest at the Moody's Rate.
(a) Any transfer made shall be made in cash and shall
be in an amount equal to the product of (x) the "current
value" of Textron Common Stock on the date on which the
stock units are converted and transferred to the Interest
Account, times (y) the number of whole and fractional stock
units which are nonforfeitable.
(b) As used in the Plan, the current value of a share
of Textron Common Stock on any date shall be the average of
the composite closing prices, as reported in The Wall Street
Journal, for the ten trading days next following that date.
Article IV - Benefits
4.01 If a Key Executive's Textron Employment ends other
than by death or for less than acceptable performance (1) at
or after age 62, or (2) as a result of Total Disability, the
amount credited to his Moody's Account at the Moody's Plus
Rate, and the amount in his Stock Unit Account which is then
nonforfeitable according to Section 3.07, each valued as of
the Determination Date immediately following the date on
which his Textron Employment ends, shall be distributed in
accordance with Article V.
4.02(a) If a Participant's Textron Employment ends
because of death, the greater of (1) the amount credited to
her Moody's Account (computed at the Moody's Plus Rate) and
her Stock Unit Account as of the Determination Date
immediately following her death, or (2) an amount equal to
ten times the sum of her Deferred Income, if any, during the
period of twelve complete calendar months ending with or
immediately before her death shall be distributable to her
Beneficiary pursuant to Article V. For the purposes of this
Section 4.02 only, any annual incentive compensation or cash
distributions for performance units or performance share
units which are deferred shall be deemed to have been
deferred on March 1 of the year in which they otherwise
would have been paid.
(b) Notwithstanding the foregoing Section 4.02(a), any
annual incentive compensation or long-term incentive
compensation that would otherwise be payable in 1993, but
which was instead paid in 1992 and was deferred by the
Participant, shall be deemed to have been deferred on March
1, 1993.
4.03 If a Key Executive's Textron Employment ends other
than as described in Section 4.01 or a Participant's Textron
Employment ends other than as described in Section 4.02, the
amount credited to his Moody's Account computed at the
Moody's Rate (unless the Chief Executive Officer and Chief
Human Resources Officer of Textron in their sole discretion
approve computation at the Moody's Plus Rate) and the amount
in his Stock Unit Account which is then nonforfeitable
according to Section 3.07, each valued as of the
Determination Date immediately following the date on which
his Textron Employment ends, shall be distributed in
accordance with Article V.
4.04 In the event of a Change in Control as defined in
Section 9.03, the amount credited to her Moody's Account
(computed at the Moody's Plus Rate) and the Stock Unit
Account (transferred immediately to an Interest Account)
shall be distributed in accordance with Article V.
4.05 Benefits shall be payable to a Participant or
Beneficiary under only one Section of this Article IV.
Article V - Payment of Benefits
5.01 The Benefits Committee or its designee shall
choose in its sole discretion the methods in Section 5.02 by
which benefits payable under Article IV shall be
distributed, after considering any method of payment
requested by the Participant or by the Beneficiaries
entitled to receive the benefits.
5.02 After benefits relating to a Participant's Moody's
Account and his Interest Account become payable under
Article IV, Textron, upon the written instructions of the
Benefits Committee or its designee, shall distribute the
benefits in accordance with any one of the following
methods:
(1) payment in a single sum; or
(2) payment in a number of annual installments, each
payable as soon as practicable after the end of each
successive calendar year, over a period not exceeding the
life expectancy of the payee or his primary Beneficiary
(whichever is greater) determined as of the date on which
the benefits first became payable. The annual installments
shall be calculated in a manner which provides substantially
equal annual installments, or shall be calculated each year
by dividing the unpaid amount of the benefits as of January
1 of that year by the remaining number of unpaid
installments; or
(3) payment through a combination of the foregoing
methods.
5.03(a) Plan benefits payable under Section 5.02 shall
begin to be paid not later than February 15 of the first
calendar year which begins on or after the date on which (1)
the final payment of the Participant's Compensation is
scheduled to be made, or (2) the Participant attains or
would have attained age sixty-five, whichever is later.
Interest shall be credited as of each Determination Date on
the unpaid balance of Plan benefits, based on the interest
rates described in Section 3.03 or Section 3.10, as
appropriate.
(b) If Plan benefits are paid from a Moody's Account in
accordance with Section 5.02(2) or 5.02(3), amounts (if any)
described in Section 3.04(b) shall be paid before any
amounts described in Section 3.04(a).
5.04 Notwithstanding any Plan provision to the
contrary, the amount then credited to the Moody's Account
and Interest Account of each Key Executive shall become due
and payable immediately upon a Change in Control as defined
in Section 9.03.
Article VI - Beneficiaries
6.01 A Participant may designate one or more Beneficiaries
to receive Plan benefits payable on the Participant's
account after his death. A Beneficiary may designate one or
more Beneficiaries to receive any unpaid Plan benefits to
the extent this designation does not contravene any
designation filed by the deceased Participant through whom
the Beneficiary himself claims under this Plan.
Beneficiaries shall be designated only upon forms made
available by or satisfactory to the Benefits Committee or
its designee, and filed by the Participant or Beneficiary
with that committee or designee.
6.02 At any time prior to his death, a Participant or
Beneficiary may change his own designation of Beneficiary by
filing a substitute designation of Beneficiary with the
Benefits Committee or its designee.
6.03 In the absence of an effective designation of
Beneficiary, or if all persons so designated shall have
predeceased the Participant or shall have died before the
complete distribution of Plan benefits, the balance of Plan
benefits shall be paid to the Participant's surviving spouse
or, if none, to the Participant's issue per stirpes or, if
no issue, to the executor or administrator of the
Participant's or Beneficiary's estate, or as otherwise
determined by the Benefits Committee in its sole discretion.
6.04 If a Participant's Compensation or a Plan benefit
is community property, any designation of Beneficiary shall
be valid or effective only as permitted under applicable
law.
6.05 If a Plan benefit is payable to a minor or person
declared incompetent or to a person incapable of handling
the disposition of his property, the Benefits Committee may
direct Textron to pay such Plan benefit to the guardian,
legal representative or person having the care and custody
of such minor, incompetent or person. The Benefits Committee
may require proof of incompetency, minority, incapacity or
guardianship as it deems appropriate prior to distribution
of the Plan benefit. Such distribution shall completely
discharge the Benefits Committee and any Textron Company
from all liability with respect to such benefit.
Article VII - Unfunded Plan
7.01 Benefits to be provided under this Plan are
unfunded obligations of Textron. Nothing contained in this
Plan shall require Textron to segregate any monies from its
general funds, to create any trust, to make any special
deposits, or to purchase any policies of insurance with
respect to such obligations. If Textron elects to purchase
individual policies of insurance on one or more of the
Participants to help finance its obligations under this
Plan, such individual policies and the proceeds therefrom
shall at all times remain the sole property of Textron and
neither the Participants whose lives are insured nor their
Beneficiaries shall have any ownership rights in such
policies of insurance.
7.02 This Plan is intended to provide benefits for a
select group of management employees who are highly
compensated, pursuant to Section 110 of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), and Labor Department Regulations Section 2520.104-
23.
Article VIII - Plan Administration
8.01 Textron shall be the plan administrator of this
Plan and shall be solely responsible for its general
administration and interpretation. Textron shall have all
such powers as may be necessary to carry out the respective
provisions hereof. Textron may from time to time establish
rules for the administration of this Plan and the
transaction of its business. Subject to Section 8.04, any
action by Textron shall be final, conclusive and binding on
each Participant and all persons claiming by, through or
under any Participant.
8.02 Textron may employ or engage such agents,
accountants, actuaries, counsel, other experts and other
persons as it deems necessary or desirable in connection
with the interpretation and administration of this Plan.
Textron shall be entitled to rely upon all certifications
made by an accountant selected by Textron. Textron and its
committees, officers, directors and employees shall not be
liable for any action taken, suffered or omitted by them in
good faith in reliance upon the advice or opinion of any
such agent, accountant, actuary, counsel or other expert.
All action so taken, suffered or omitted shall be conclusive
upon each of them and upon all other persons interested in
this Plan.
8.03 Textron may require proof of the death or Total
Disability of any Participant, former Participant or
Beneficiary and evidence of the right of any person to
receive any Plan benefit.
8.04 Claims under this Plan shall be filed with Textron
on its prescribed forms. If a claim is denied, wholly or in
part, it shall be denied within a reasonable time after its
filing in a writing delivered to the claimant with the
reasons for the denial, citations to pertinent provisions of
the Plan, a description of any additional material or
information to be furnished by the claimant and the reasons
therefor, and an explanation of the Plan's claim review
procedure. If the claimant wishes further consideration of
her claim, she or her authorized representative shall submit
to Textron within 90 days after her claim has been denied a
written request for a hearing. Such claimant or her
authorized representative may then review pertinent
documents and submit issues and comments in writing. Textron
shall schedule an opportunity for a full and fair hearing of
the issue within the next 60 days. Within 60 days after the
hearing, Textron shall communicate its decision to the
claimant in writing, stating the reasons for its decision
and referring to pertinent Plan provisions.
8.05 Textron shall withhold from benefits paid under
this Plan any taxes or other amounts required to be withheld
by law.
Article IX - Miscellaneous
9.01 Unless a contrary or different meaning is
expressly provided, each use in this Plan of the masculine
or feminine gender shall include the other and each use of
the singular number shall include the plural.
9.02 No benefit payable at any time under this Plan
shall be subject in any manner to alienation, sale,
transfer, assignment, pledge or encumbrance of any kind
unless specifically approved in writing in advance by the
Benefits Committee or its designee. Any attempt to alienate,
sell, transfer, assign, pledge or otherwise encumber any
such benefit, whether presently or subsequently payable,
shall be void unless so approved. Except as required by law,
no benefit payable under this Plan shall in any manner be
subject to garnishment, attachment, execution or other legal
process, or be liable for or subject to the debts or
liability of any Participant or Beneficiary.
9.03 The Board or its designee shall have the right to
amend, modify, suspend or terminate this Plan at any time by
written ratification of such action; provided, however, that
no amendment, modification, suspension or termination:
(1) shall reduce the amount credited to any Moody's
Account, Stock Unit Account or Interest Account immediately
before the effective date of the amendment, modification,
suspension or termination; or
(2) shall be made to Article V or this Section 9.03
following a Change in Control.
If after a Change in Control any claim is made or any
litigation is brought by a Participant or Beneficiary to
enforce or interpret any provision contained in this Plan,
Textron and the "person" or "group" described in the next
following sentence shall be liable, jointly and severally,
to indemnify the Participant or Beneficiary for the
Participant's or Beneficiary's reasonable attorney's fees
and disbursements incurred in any such claim or litigation
and for prejudgment interest at the Bankers Trust Company
prime interest rate on any money award or judgment obtained
by the Participant or Beneficiary.
For purposes of this Plan, a "Change in Control" shall occur
if (i) any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Act")) other than Textron, any
trustee or other fiduciary holding Textron Common Stock
under an employee benefit plan of Textron or a related
company, or any corporation which is owned, directly or
indirectly, by the stockholders of Textron in substantially
the same proportions as their ownership of Textron Common
Stock, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Act) of more than 30% of the then
outstanding voting stock of Textron, or (ii) during any
period of two consecutive years, individuals who at the
beginning of such period constitute the Board (and any new
director whose election by the Board or whose nomination for
election by the stockholders of Textron was approved by a
vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of such
period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a
majority thereof, or (iii) the stockholders of Textron
approve a merger or consolidation of Textron with any other
corporation, other than a merger or consolidation which
would result in the voting securities of Textron outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 80% of the
combined voting power of the voting securities of Textron or
such surviving entity outstanding immediately after such
merger or consolidation, or (iv) the stockholders of Textron
approve a plan of complete liquidation of Textron or an
agreement for the sale or disposition by Textron of all or
substantially all of Textron's assets.
9.04 This Plan shall be construed in accordance with
the laws of the State of Delaware.
9.05 Nothing contained in this Plan shall be construed
as a contract of employment between any Participant and any
Textron Company, or to suggest or create a right in any
Participant to be continued in employment as a Key Executive
or other employee of any Textron Company.
9.06 Textron, the Chief Executive Officer and the Chief
Human Resources Officer, and the Benefits Committee may
impose such other lawful terms and conditions on
participation in this Plan as deemed desirable. The Chief
Executive Officer, the Chief Human Resources Officer and
members of the Benefits Committee may participate in this
Plan.
IN WITNESS WHEREOF, Textron Inc. has caused this
restated Plan to be executed by its duly authorized officer
to be effective as of January 1, 1994.
TEXTRON INC.
By: /s/William F. Wayland
William F. Wayland
Executive Vice President
Administration and
Chief Human Resources Officer
Date: November 27, 1995
SEVERANCE PLAN FOR TEXTRON KEY EXECUTIVES
This Plan has been established for the benefit of certain
Textron Executives to secure their goodwill, loyalty and
achievement, and in consideration of their past service.
This Plan as restated shall be effective from and after
January 1, 1994, except as otherwise provided.
Article I - Definitions
Whenever used in this document, the following terms shall
have the meanings set forth in this Article, unless a contrary
or different meaning is expressly provided:
1.01 "Benefits Committee" means the Benefits Committee
appointed by the Board.
1.02 "Board" means the Board of Directors of Textron.
1.03 A "Change in Control" shall occur if (i) any
"person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Act")) other than Textron, any trustee or other
fiduciary holding Textron Common Stock under an employee
benefit plan of Textron or a related company, or any
corporation which is owned, directly or indirectly, by the
stockholders of Textron in substantially the same proportions
as their ownership of Textron Common Stock, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act) of
more than 30% of the then outstanding voting stock of Textron,
or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board (and any new director whose election by the Board or
whose nomination for election by the stockholders of Textron
was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the
beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority thereof, or (iii) the stockholders of
Textron approve a merger or consolidation of Textron with any
other corporation, other than a merger or consolidation which
would result in the voting securities of Textron outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 80% of the
combined voting power of the voting securities of Textron or
such surviving entity outstanding immediately after such
merger or consolidation, or (iv) the stockholders of Textron
approve a plan of complete liquidation of Textron or an
agreement for the sale or disposition by Textron of all or
substantially all of Textron's assets.
1.04 "Chief Executive Officer" means the Chief Executive
Officer of Textron, or such person(s) as he may designate from
time to time to exercise any of his responsibilities under
this Plan.
1.05 "Key Executive" means an employee of a Textron
Company who has been and continues to be designated as a Key
Executive under the Plan by the Chief Executive Officer and
Chief Human Resources Officer of Textron. A Key Executive may
subsequently waive participation in this Plan by an express
written instrument to that effect.
1.06 "Plan" means this Severance Plan for Textron Key
Executives.
1.07 "Severance" means a termination or other action or
situation which is described in Article II.
1.08 "Severance Pay" means the amount described in and
payable under Sections 3.01 and 3.02. Notwithstanding any
provision of any other plan, contract or arrangement to which
a Textron Company is a party, including without limitation any
employee benefit plan, Severance Pay shall not be taken into
account in determining the amount of any benefit or
compensation thereunder.
1.09 "Textron" means Textron Inc., a Delaware
corporation, and any successor of
Textron Inc.
1.10 "Textron Company" means Textron or any company
controlled by or under common control with Textron.
1.11 "Textron Employment" means employment with a Textron
Company. Leaves of absence for such periods and purposes as
are approved by Textron and transfers of employment within or
between Textron Companies shall not be deemed interruptions of
Textron Employment.
Article II - Severance
2.01 A Severance shall occur for purposes of this Plan if
a Key Executive's Textron Employment is terminated (other than
for less than acceptable performance, as determined by
Textron) by express notice in writing given by Textron.
2.02 In addition, a Severance shall occur for purposes of
this Plan if, within the two-year period immediately following
a Change in Control:
(1) the Key Executive's position, authority or
responsibilities, the type of work which the Key Executive is
asked to perform, the Key Executive's base salary or
opportunity to earn incentive compensation, the Key
Executive's working conditions and perquisites, or the status
and stature of the people with whom the Key Executive is asked
to work, are not comparable to that existing with respect to
the Key Executive on the day before the date of the Change in
Control (except to the extent, if any, to which the Key
Executive expressly agrees in writing); or
(2) the Key Executive's services may not be performed at
the location where the Key Executive was employed on the day
before the date of the Change in Control or at such other
location as may be mutually agreed by Textron and the Key
Executive.
Article III - Severance Pay and Severance Benefits
3.01 Severance Pay shall be determined as of the date of
the Key Executive's Severance, and shall equal 150% of the
sum of:
(1) the Key Executive's annual rate of base salary at
the date of Severance, except that any reduction in base
salary following a Change in Control shall be disregarded; and
(2) either (a) the greatest of the Key Executive's three
most recent awards, actually granted, of annual incentive
compensation, whether or not deferred, from Textron, or (b)
the Key Executive's current Target Incentive Compensation
under a Textron annual incentive compensation plan, whichever
is larger.
3.02 Textron shall pay Severance Pay to the Key Executive
in a single sum within 30 days immediately following
Severance. If the Key Executive dies before this payment has
been made, Textron shall pay Severance Pay to the Key
Executive's surviving spouse, or, if none, to the Key
Executive's issue per stirpes, or, if no surviving spouse or
issue, to the executor or administrator of the Key Executive's
estate.
3.03 In addition, if the Severance occurs following a
Change in Control or under other circumstances approved in
writing by Textron's Chief Executive Officer and Chief Human
Resources Officer, Textron shall provide, at its sole cost,
medical and dental benefits ("Severance Benefits") to the Key
Executive and to his dependents, on terms which are not less
favorable to them than the terms existing immediately before
the Severance of that Key Executive. Such benefits shall be
continued for the period provided by Internal Revenue Code
section 4980B(f).
Article IV - Unfunded Plan
4.01 Severance Pay and Severance Benefits to be provided
under this Plan are unfunded obligations of Textron. Nothing
contained in this Plan shall require Textron to segregate any
monies from its general funds, to create any trust, to make
any special deposits, or to purchase any policies of insurance
with respect to such obligations.
4.02 This Plan is intended to be a welfare plan providing
benefits for a select group of management employees who are
highly compensated, pursuant to Sections 3(1) and 104(a)(3) of
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Labor Department Regulations Section
2520.104-24.
4.03 No Key Executive shall be required or permitted to
make contributions to this Plan.
Article V - Plan Administration
5.01 For the purposes of ERISA, Textron shall be the plan
administrator of this Plan and shall be solely responsible for
its general administration and interpretation. Textron shall
have all such powers as may be necessary to carry out the
respective provisions hereof. Textron may from time to time
establish rules for the administration of this Plan and the
transaction of its business. Subject to Section 5.03, any
action by Textron shall be final, conclusive and binding on
each Key Executive and all persons claiming by, through or
under any Key Executive.
5.02 Textron may employ or engage such agents,
accountants, actuaries, counsel, other experts and other
persons as it deems necessary or desirable in connection with
the interpretation and administration of this Plan. Textron
shall be entitled to rely upon all certifications made by an
accountant selected by Textron. Textron and its committees,
officers, directors and employees shall not be liable for any
action taken, suffered or omitted by them in good faith in
reliance upon the advice or opinion of any such agent,
accountant, actuary, counsel or other expert. All action so
taken, suffered or omitted shall be conclusive upon each of
them and upon all other persons interested in this Plan.
5.03 Claims under this Plan shall be filed with Textron
on its prescribed forms. If a claim is denied, wholly or in
part, it shall be denied within a reasonable time after its
filing in a writing delivered to the claimant with the reasons
for the denial, citations to pertinent provisions of the Plan,
a description of any additional material or information to be
furnished by the claimant and the reasons therefor, and an
explanation of the Plan's claim review procedure. If the
claimant wishes further consideration of her claim, she or her
authorized representative shall submit to Textron, within 90
days after her claim has been denied, a written request for a
hearing. Such claimant or her authorized representative may
then review pertinent documents and submit issues and comments
in writing. Textron shall schedule an opportunity for a full
and fair hearing of the issue within the next 60 days. Within
60 days after the hearing, Textron shall communicate its
decision to the claimant in writing, stating the reasons for
its decision and referring to pertinent Plan provisions.
5.04 Textron shall withhold from Severance Pay or
Severance Benefits any taxes or other amounts required to be
withheld by law.
Article VI - Miscellaneous
6.01 Unless a contrary or different meaning is expressly
provided, each use in this Plan of the masculine or feminine
gender shall include the other and each use of the singular
number shall include the plural.
6.02 No Severance Pay or Severance Benefits shall be
subject in any manner to alienation, sale, transfer,
assignment, pledge, or encumbrance of any kind unless
specifically approved in writing in advance by the Benefits
Committee or its designee. Any attempt to alienate, sell,
transfer, assign, pledge or otherwise encumber any Severance
Pay or Severance Benefits, whether presently or thereafter
payable, shall be void unless so approved. Except as required
by law, no Severance Pay or Severance Benefits payable under
this Plan shall in any manner be subject to garnishment,
attachment, execution, or other legal process, or be liable
for or subject to the debts or liability of any Key Executive.
6.03 Notwithstanding any Plan provision to the contrary,
Textron shall have the right to amend, modify, suspend or
terminate this Plan at any time by written ratification of the
Board or its designee; provided, however, that no amendment,
modification, suspension or termination:
(1) shall adversely affect the right of a Key Executive
to receive Severance Pay and Severance Benefits, or amounts
under Section 6.05, payable as the result of the Severance of
the Key Executive which occurred before the effective date of
the amendment, modification, suspension or termination; or
(2) shall be made to the Plan within the two-year period
immediately following a Change in Control without the express
written consent of the Key Executive affected.
6.04 Nothing contained in this Plan shall be construed as
a contract of employment between any Key Executive and any
Textron Company, or to suggest or create a right in any Key
Executive to be continued in employment as a Key Executive or
other employee of any Textron Company.
6.05 Following a Change in Control, if any claim is made
or any litigation is brought by a Key Executive or any person
claiming through a Key Executive, to enforce or interpret any
provision contained in this Plan, Textron and the "person" or
"group" described in Section 1.02 shall be liable, jointly and
severally, to indemnify the Key Executive or other claimant
for reasonable attorney's fees and disbursements incurred in
any such claim or litigation and for prejudgment interest at
the Bankers Trust Company prime interest rate on any money
award or judgment obtained by the Key Executive or other
claimant.
6.06 This document shall be construed in accordance with
the laws of the State of Delaware.
6.07 Textron, the Chief Executive Officer and the Chief
Human Resources Officer, and the Benefits Committee may impose
such other lawful terms and conditions on participation in
this Plan as deemed desirable. The Chief Executive Officer,
the Chief Human Resources Officer and members of the Benefits
Committee may participate in this Plan.
IN WITNESS WHEREOF, Textron Inc. has caused this restated
Plan to be executed by its duly authorized officer to be
effective as of January 1, 1994.
TEXTRON INC.
By: /s/William F. Wayland
William F. Wayland
Executive Vice President
Administration and
Chief Human Resources Officer
Date: November 27, 1995
SPECIAL BENEFITS
Club Membership
Reimbursement for the cost of belonging to one company-
approved club. Reimbursement includes, on a one-time basis,
initiation or other entrance fees of up to $10,000. In limited
circumstances, the Chief Human Resources Officer of Textron may
make exceptions to this dollar limit. Reimbursement also
includes regular dues and assessments, limited to $5,000 a year.
Financial Planning and Tax Preparation
Reimbursement for outside financial and estate planning
services and for annual tax preparation services. Up to $10,000
may be reimbursed for the initial plan preparation, and up to
$10,000 a year may be reimbursed for annual plan maintenance and
tax preparation.
Physical Examination
Comprehensive annual physical examination.
Automotive Allowance
Company automobile and reimbursement of operating expenses.
SUPPLEMENTAL BENEFITS PLAN FOR TEXTRON KEY EXECUTIVES
This plan has been established for the benefit of certain
Textron Key Executives to assure and provide the benefits
promised to them as participants in certain Textron qualified
plans that would have been payable under those plans except
for limitations imposed under the Internal Revenue Code.
This Plan as restated shall be effective from and after
January 1, 1994, except as otherwise provided.
Article I - Definitions
Whenever used in this document, the following terms shall
have the meanings set forth in this Article, unless a contrary
or different meaning is expressly provided:
1.01 "Administrative Committee" means the Administrative
and Management Committee appointed by the Board.
1.02 "Bell Plan" means the Bell Helicopter Textron
Retirement Plan, as amended and restated from time to time.
1.03 "Benefits Committee" means the Benefits Committee
appointed by the Board.
1.04 "Board" means the Board of Directors of Textron.
1.05 "Deferral Plan" means the Deferred Income Plan for
Textron Key Executives, as amended and restated from time to
time.
1.06 "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
1.07 "Excess Plan" means the Textron Excess Benefit Plan
for Participating Executives, as amended. The Excess Plan was
superseded by this Plan.
1.08 "Included Plan" means a Textron defined benefit or
defined contribution plan specifically designated by the
Administrative Committee under Article V.
1.09 "Key Executive" means an employee of a Textron
Company who has been and continues to be designated as a Key
Executive under the Plan by Textron's Chief Executive Officer
and Chief Human Resources Officer.
1.10 "Participant" means a Key Executive who is
participating in this Plan pursuant to Article II and, unless
the context clearly indicates to the contrary, a former
Participant who is entitled to benefits under this Plan.
1.11 "Pension Plan" means the Bell Plan, the Textron
Pension Plan or an Included Plan which is a defined benefit
plan.
1.12 "Plan" means this Supplemental Benefits Plan for
Textron Key Executives, formerly the Supplemental Benefits
Plan for Textron Employees, as amended and restated from time
to time.
1.13 "Statutory Limit" means any limit on benefits under,
or annual additions to, qualified plans imposed by section
401(a)(17) or 415 of the Internal Revenue Codes of 1954 or
1986, as amended from time to time.
1.14 "Savings Plan" means the Textron Savings Plan, as
amended and restated from time to time.
1.15 "Textron" means Textron Inc., a Delaware
corporation, and any successor of Textron Inc.
1.16 "Textron Company" means Textron or any company
controlled by or under common control with Textron.
1.17 "Textron Pension Plan" means the Textron Pension
Plan, as amended and restated from time to time.
Article II - Participation
2.01 A Key Executive shall participate in this Plan if
(1) her benefits under a Pension Plan, or (2) the annual
additions to her accounts under the Savings Plan or any
Included Plan which is a defined contribution plan, or (3)
both such benefits and such additions, are limited by one or
more Statutory Limits. In addition, a Key Executive shall
participate in this Plan if her receipt of any compensation is
deferred under the Deferred Income Plan for Textron Key
Executives.
Article III - Supplemental Pension Benefits
3.01 Textron shall pay on account of each Participant who
begins to receive payments under one or more of the Pension
Plans the amount, if any, by which (1) the normal, early or
vested retirement pension that would have been payable on the
Participant's account under the Pension Plans but for (a) the
operation of a Statutory Limit, (b) the deferral of
compensation under the Deferral Plan, or (c) the calculation
of annual incentive compensation on a cash rather than an
accrual basis exceeds (2) the normal, early or vested
retirement pension calculated under the Pension Plans on the
Participant's account.
3.02 Textron shall pay to the beneficiary designated by
the Participant under each Pension Plan the amount, if any, by
which (1) the death benefit that would have been payable under
that Pension Plan on the Participant's account but for (a) the
operation of a Statutory Limit, (b) the deferral of
compensation under the Deferral Plan, or (c) the calculation
of annual incentive compensation on a cash rather than an
accrual basis exceeds (2) the death benefit which is actually
payable under that Pension Plan on the Participant's account.
For the purposes of this Section 3.02, the term "death
benefit" shall include any period certain death benefit and
any surviving spouse benefit provided by a Textron Company at
its sole cost through a Pension Plan.
3.03 In the event Textron transfers the liability of a
Pension Plan on account of a Participant to another qualified
plan, supplemental pension or death benefits under Sections
3.01 and 3.02, respectively, shall be determined as of such
transfer, unless otherwise determined by Textron in its sole
discretion.
Article IV - Supplemental Savings Benefits
4.01 Textron shall maintain a supplemental savings
account for each Participant who participates in the Savings
Plan at any time after December 31, 1983, to which account the
credits, and from which the payments described in this Article
IV, shall be made.
4.02 For the purposes of this Article IV, (1) the terms
"Payroll Contributions," "Compensation Deferral," "Eligible
Compensation," "Matching Account," and "Tax Credit Account"
shall have the meanings assigned by the Savings Plan; (2)
"Monthly Deferral" means any amount which would have been
Eligible Compensation in a calendar month except for its
deferral under the Deferral Plan; and (3) "Supplemental
Shares" means fictional shares of Textron Common Stock
accumulated and accounted for under this Plan for the sole
purpose of determining the cash amount of each distribution
from a Participant's supplemental savings account.
4.03 As of the end of each calendar month, beginning
January 31, 1986, Textron shall credit Supplemental Shares to
each supplemental savings account equal in number to the
excess, if any, of:
(1) the number of shares of Textron Common Stock which
could be purchased with an amount equal to (a) the sum of the
Participant's Payroll Contributions and Compensation Deferral
under the Savings Plan during that month, divided by (b) 10%
(or such lesser percentage as Textron estimates to be the
maximum permitted by the Statutory Limits) of the
Participant's Eligible Compensation during that month
excluding any Monthly Deferral, multiplied by (c) 5% of the
sum of the Participant's Eligible Compensation during that
month and her Monthly Deferral, at a price per share equal to
the average price per share of Textron Common Stock
contributed to the Savings Plan for that month or purchased by
the Savings Plan with contributions made during that month;
over
(2) the number of shares of Textron Common Stock actually
credited as matching contributions to the Participant's
Matching Account under the Savings Plan for that month.
4.04 As of the end of each calendar month, beginning
January 31, 1986, Textron shall credit Supplemental Shares to
each supplemental savings account equal in number to the
excess, if any, of:
(1) the number of shares of Textron Common Stock that
would have been allocated on account of dividends to the
Participant's Matching Account under the Savings Plan as of
that date, (based on the average price per share of Textron
Common Stock contributed to the Savings Plan for that month or
purchased by the Savings Plan for that purpose during that
month), if the Supplemental Shares credited to the
Participant's supplemental savings account had been credited
instead as shares of Textron Common Stock to her Matching
Account under the Savings Plan; over
(2) the number of shares of Textron Common Stock actually
credited on account of dividends to the Participant's Matching
Account under the Savings Plan for that month.
4.05 No Supplemental Shares shall be credited under this
Plan on account of the failure to allocate any shares of
Textron Common Stock to the Participant's Tax Credit Account
under the Savings Plan due to (1) the operation of a Statutory
Limit or (2) the deferral of compensation under the Deferral
Plan.
4.06 The cash value of a Participant's supplemental
savings account shall be transferred to a fixed income fund
upon termination of the Participant's Textron employment. Said
value shall be an amount equal to the product of (x) the
current value of Textron Common Stock at the time of the
Participant's termination of employment, times (y) the number
of whole and fractional Supplemental Shares which are subject
to distribution. If any portion of a Participant's accounts
under the Savings Plan shall be forfeited, a proportionate
part of the Participant's Supplemental Shares also shall be
forfeited. The current value of a share of Textron Common
Stock at any date shall be the average of the composite
closing prices, as reported in The Wall Street Journal, for
the ten trading days next following that date.
4.07 The number of Supplemental Shares credited to a
Participant's account under this Article IV shall be adjusted,
without receipt of any consideration by Textron, on account of
any stock split, stock dividend or similar increase or
decrease affecting Textron Common Stock, as if the
Supplemental Shares were actually shares of Textron Common
Stock.
4.08 The balance, if any, to the credit of a
Participant's supplemental stock savings account as of
December 31, 1983 under the Excess Plan was credited as
Supplemental Shares and constituted the opening balance in the
Participant's supplemental stock savings account as of January
1, 1984 under Article IV of this Plan when first effective.
The balance, if any, to the credit of a Participant's
supplemental stock savings account as of December 31, 1985
under Article IV of this Plan constituted the opening balance
in the Participant's supplemental savings account as of
January 1, 1986 under this Article IV.
Article V - Supplemental Included Plan Benefits
5.01 The Administrative Committee may cause this Plan to
provide supplemental benefits on account of an Included Plan
by adopting a Schedule to this Plan. The Schedule shall
specify any special terms or conditions upon which the
supplemental benefits shall be provided. Except as
specifically provided in a Schedule, all of the terms and
conditions of this Plan shall apply in connection with an
Included Plan.
Article VI - Unfunded Plan
6.01 Benefits to be provided under this Plan are unfunded
obligations of Textron. Nothing contained in this Plan shall
require Textron to segregate any monies from its general
funds, to create any trust, to make any special deposits, or
to purchase any policies of insurance with respect to such
obligations. If Textron elects to purchase individual policies
of insurance on one or more of the Participants to help
finance its obligations under this Plan, such individual
policies and the proceeds therefrom shall at all times remain
the sole property of Textron and neither the Participants
whose lives are insured nor their beneficiaries shall have any
ownership rights in such policies of insurance.
6.02 This Plan is intended in part to provide benefits
for a select group of management employees who are highly
compensated, pursuant to section 110 of ERISA and Labor
Department Regulations section 2520.104-23, and in part to be
an excess benefit plan, pursuant to section 3(36) of ERISA.
6.03 No Participant shall be required or permitted to
make contributions to this Plan.
Article VII - Plan Administration
7.01 Textron shall be the plan administrator of this Plan
and shall be solely responsible for its general administration
and interpretation. Textron shall have all such powers as may
be necessary to carry out the necessary provisions hereof.
Textron may from time to time establish rules for the
administration of this Plan and the transaction of its
business. Subject to Section 7.05, any action by Textron shall
be final, conclusive and binding on each Key Executive and all
persons claiming by, through or under any Key Executive.
7.02(a) The payment of any benefit under Article III or
the distribution of any account under Article IV or Article V
shall be made at the same time, in the same manner, to the
same persons and in the same proportions, as is made the
payment or distribution under the related Qualified Plan, or
otherwise as determined by the Benefits Committee in its sole
discretion. Textron may withhold from benefits and accounts
under this Plan, any taxes or other amounts required by law to
be withheld. For purposes of this Section 7.02, "Qualified
Plan" means a Pension Plan, the Savings Plan or any other
Included Plan.
Notwithstanding any provision to the contrary, no benefit
shall be paid to any Participant while employed by Textron.
(b) Notwithstanding the first sentence of Section
7.02(a), each benefit then computed under Article III and each
amount then credited to the accounts under Article V shall
become due and payable to the respective Participants and
beneficiaries immediately upon a Change in Control as defined
in Section 8.03. For purposes of this Section 7.02, the
present value of a benefit computed under Article III shall be
based on the appropriate actuarial assumptions and factors set
forth in the related Qualified Plan and, if no interest rate
assumption has been set forth for any purpose, an interest
rate of six percent per year.
(c) Any amounts credited to accounts under Article IV and
Article V may be distributed only upon death, disability,
retirement or termination of employment from Textron.
7.03 Textron may employ or engage such agents,
accountants, actuaries, counsel, other experts and other
persons as it deems necessary or desirable in connection with
the interpretation and administration of this Plan. Textron
shall be entitled to rely upon all certifications made by an
accountant selected by Textron. Textron and its committees,
officers, directors and employees shall not be liable for any
action taken, suffered or omitted by them in good faith in
reliance upon the advice or opinion of any such agent,
accountant, actuary, counsel or other expert. All action so
taken, suffered or omitted shall be conclusive upon each of
them and upon all other persons interested in this Plan.
7.04 Textron may require proof of death or total
disability of any Participant, former Participant or
beneficiary and evidence of the right of any person to receive
any Plan benefit.
7.05 Claims under this Plan shall be filed with Textron
on its prescribed forms. If a claim is denied wholly or in
part, it shall be denied within a reasonable time after its
filing in a writing delivered to the claimant with the reasons
for the denial, citations to pertinent provisions of the Plan,
a description of any additional material or information to be
furnished by the claimant and the reasons therefor and an
explanation of the Plan's claim review procedure. If the
claimant wishes further consideration of his claim, he or his
authorized representative shall submit to Textron, within 90
days after his claim has been denied, a written request for a
hearing. Such claimant or his authorized representative may
then review pertinent documents and submit issues and comments
in writing. Textron shall schedule an opportunity for a full
and fair hearing of the issue within the next 60 days. Within
60 days after the hearing, Textron shall communicate its
decision to the claimant in writing, stating the reasons for
its decision and referring to pertinent Plan provisions.
7.06 Textron shall withhold from benefits paid under this
Plan any taxes or other amounts required to be withheld by
law.
Article VIII - Miscellaneous
8.01 Unless a contrary or different meaning is expressly
provided, each use in this Plan of the masculine or feminine
gender shall include the other and each use of the singular
number shall include the plural.
8.02 No amount payable at any time under this Plan shall
be subject in any manner to alienation, sale, transfer,
assignment, pledge or encumbrance of any kind unless
specifically approved in writing in advance by the Benefits
Committee or its designee. Any attempt to alienate, sell,
transfer, assign, pledge or otherwise encumber any such
benefit, whether presently or subsequently payable, shall be
void unless so approved. Except as required by law, no benefit
payable under this Plan shall in any manner be subject to
garnishment, attachment, execution or other legal process, or
be liable for or subject to the debts or liability of any
Participant or beneficiary.
8.03 Notwithstanding any Plan provision to the contrary,
the Board or its designee shall have the right to amend,
modify, suspend or terminate this Plan at any time by written
ratification of such action; provided, however, that no
amendment, modification, suspension or termination:
(1) shall reduce an amount payable under Article III or
credited to any supplemental account under Article IV or
Article V of this Plan immediately before the effective date
of the amendment, modification, suspension or termination; or
(2) shall be made to Section 7.02 or 8.03 following a
Change in Control. If after a Change in Control any claim is
made or any litigation is brought by a Participant or
beneficiary to enforce or interpret any provision contained in
this Plan, Textron and the "person" or "group" described in
the next following sentence shall be liable, jointly and
severally, to indemnify the Participant or beneficiary for the
Participant's or beneficiary's reasonable attorney's fees and
disbursements incurred in any such claim or litigation and for
prejudgment interest at the Bankers Trust Company prime
interest rate on any money award or judgment obtained by the
Participant or beneficiary.
For purposes of this Plan, a "Change in Control" shall occur
if (i) any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Act")) other than Textron, any trustee or other
fiduciary holding Textron Common Stock under an employee
benefit plan of Textron or a related company, or any
corporation which is owned, directly or indirectly, by the
stockholders of Textron in substantially the same proportions
as their ownership of Textron Common Stock, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act) of
more than 30% of the then outstanding voting stock of Textron,
or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board (and any new director whose election by the Board or
whose nomination for election by the stockholders of Textron
was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the
beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority thereof, or (iii) the stockholders of
Textron approve a merger or consolidation of Textron with any
other corporation, other than a merger or consolidation which
would result in the voting securities of Textron outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 80% of the
combined voting power of the voting securities of Textron or
such surviving entity outstanding immediately after such
merger or consolidation, or (iv) the stockholders of Textron
approve a plan of complete liquidation of Textron or an
agreement for the sale or
disposition by Textron of all or substantially all of
Textron's assets.
8.04 Effective January 1, 1984, this Plan superseded the
Excess Plan with respect to all Participants. In no event
shall sums be payable under both the Excess Plan and this Plan
to any Participant or any person claiming through him.
8.05 This Plan shall be construed in accordance with the
laws of the State of Delaware.
8.06 Nothing contained in this Plan shall be construed as
a contract of employment between any Participant and any
Textron Company, or to suggest or create a right in any
Participant to be continued in employment as a Key Executive
or other employee of any Textron Company.
8.07 Textron, the Chief Executive Officer and the Chief
Human Resources Officer, and the Benefits Committee may impose
such other lawful terms and conditions on participation in
this Plan as deemed desirable. The Chief Executive Officer,
the Chief Human Resources Officer and members of the Benefits
Committee may participate in this Plan.
IN WITNESS WHEREOF, Textron Inc. has caused this restated Plan
to be executed by its duly authorized officer to be effective
as of January 1, 1994.
TEXTRON INC.
By: /s/ William F. Wayland
William F. Wayland
Executive Vice President
Administration and
Chief Human Resources Officer
Date: November 27, 1995
MARKET SQUARE PROFIT SHARING PLAN SCHEDULE
This Schedule to the Supplemental Benefits Plan for Textron
Key Executives (the "Plan") has been adopted by the
Administrative Committee effective December 10, 1991 pursuant
to Article V of the Plan. This Schedule supersedes a schedule
effective January 1, 1989.
Article I - Definitions
Terms used in this Schedule and defined in the Plan shall
have the same meanings as in the Plan and the following terms
shall have the meanings set forth in this Article.
1.01 "Market Square Plan" means The Market Square Profit
Sharing Plan, as amended and restated from time to time.
1.02 "Eligible Employee" means an Eligible Employee under
Section 1.01(j) of the Market Square Plan at any time after
December 31, 1983.
1.03 "Key Executive" means an employee of a Textron
Company who has been and continues to be designated as a Key
Executive under the Plan by Textron's Chief Executive Officer
and Chief Human Resources Officer.
1.04 "Stock Unit Account" means the account consisting of
stock units, which are fictional shares of Textron Common
Stock accumulated and accounted for under this Plan for the
sole purpose of determining the cash amount of any
supplemental benefits on account of the Market Square Plan.
Article II - Supplemental Market Square Benefits
2.01 Textron shall maintain a supplemental Market Square
account for each Participant who is an Eligible Employee or a
Key Executive, to which account the credits and from which the
payments described in this Article II shall be made.
2.02 As of December 31 of each year, beginning December
31, 1991, Textron shall credit to the Participant's
supplemental Market Square account the amount, if any, by
which (1) the portion of the Textron contribution that would
have been allocated to the Participant's account under the
Market Square Plan for that calendar year but for (a) the
operation of a Statutory Limit, (b) the deferral of
compensation under the Deferral Plan, (c) the operation of
Section 1.01(j) of the Market Square Plan, as restated
effective January 1, 1989, and (d) the amendment of Section
1.01(m) of the Market Square Plan, effective January 1, 1991,
exceeds (2) the portion of the Textron contribution actually
allocated to that account for that year.
2.03 As of the close of business on each December 31, and
as of the close of business at the end of each calendar
quarter after December 31, 1990, the supplemental Market
Square
account of each Participant shall be adjusted as provided in
Section 5.04 of the Market Square Plan to the same extent it
would have been adjusted if it had been included in the Market
Square Plan throughout the entire year, or in the case of
quarterly adjustments after December 31, 1990, as if it had
been included in the Market Square Plan throughout the entire
quarter.
Article III - Stock Unit Account, Interest and Earnings
3.01 Article II shall continue in effect for all amounts
credited before December 31, 1992, to a Participant's
supplemental Market Square account in lieu of contributions to
the Market Square Plan, and earnings thereon. This Article III
shall apply to all amounts credited after December 30, 1992,
to a Participant's supplemental Market Square account.
3.02 For record-keeping purposes only, Textron shall
maintain a Stock Unit Account for each Participant to which
account the credits, and from which the payments described in
this Article III, shall be made.
3.03 As of December 31 of each year, Textron shall credit
to the Participant's supplemental Market Square account an
amount equal to the portion of the Textron contribution that
would have been allocated to the Participant's account under
the Market Square Plan for that calendar year but for (a) the
operation of a Statutory Limit, (b) the deferral of
compensation under the Deferral Plan, (c) the operation of
Section 1.01(j) of the Market Square Plan, as restated
effective January 1, 1989, and (d) the amendment of Section
1.01(m) of the Market Square Plan, effective January 1, 1991.
3.04 Using the formula set forth in Section 3.03, as of
December 31 of each year beginning December 31, 1992, Textron
shall credit Stock Units to the Participant's Stock Unit
Account equal in number to the number of shares of Textron
Common Stock that could have been purchased with the Textron
contribution at a price per share equal to the current value
of a share of Textron Common Stock, as defined in Section
3.06, on that date.
3.05 From time to time beginning March 31, 1993, Textron
shall credit stock units to a Participant's Stock Unit Account
equal in number to the number of shares of Textron Common
Stock that would have been allocated on account of dividends
to the Participant's Stock Unit Account as of that date, based
on the average price per share of Textron Common Stock
purchased by the Textron Savings Plan (as amended from time to
time, the "Savings Plan") for that purpose, as if the stock
units were actually shares of Textron Common Stock.
3.06 As used in this Schedule, the "current value" of a
share of Textron Common Stock on any date shall be the average
of the composite closing prices, as reported in The Wall
Street Journal, for the ten trading days next following that
date.
Article IV - Transfer and Distribution
4.01 At termination of a Participant's Textron
Employment, the Stock Unit Account shall be transferred to the
general fund.
4.02 Any transfer pursuant to Section 4.01 shall be made
in cash and shall be in an amount equal to the product of (x)
the current value of Textron Common Stock as defined in
Section 3.06, on the effective date of a Participant's
termination of Textron Employment, times (y) the number of
whole and fractional stock units in his Account.
IN WITNESS WHEREOF, Textron Inc. has caused this restated
Plan to be executed by its duly authorized officer to be
effective as of January 1, 1994.
SUPPLEMENTAL RETIREMENT PLAN FOR TEXTRON KEY EXECUTIVES
This Plan has been established for the benefit of
certain Textron Key Executives to secure their goodwill,
loyalty and achievement and to attract to and retain in the
employ of Textron Companies persons of outstanding
competence whose employment with a Textron Company began or
begins at or after age 45.
This Plan shall be effective as of December 15, 1994.
Article I - Definitions
Whenever used in this document the following terms
shall have the meanings set forth in this Article, unless a
contrary or different meaning is expressly provided:
1.01 "Average Pay" means the average of a Participant's
compensation paid during the five consecutive years in which
the compensation is highest.
1.02 "Beneficiary" means the person or persons entitled
under this Plan to receive Plan benefits.
1.03 "Benefits Committee" means the Benefits Committee
appointed by the Board.
1.04 "Board" means the Board of Directors of Textron.
1.05 "Compensation" means base salary, accrued annual
incentive compensation, performance units and performance
share units, whether or not deferred under the Deferred
Income Plan for Textron Key Executives.
1.06 "Key Executive" means an employee of a Textron
Company who has been and continues to be designated as a Key
Executive under the Plan by the Chief Executive Officer and
Chief Human Resources Officer of Textron.
1.07 "Participant" means a Key Executive who is
participating in this Plan.
1.08 "Plan" means this Supplemental Retirement Plan for
Textron Key Executives, as amended from time to time.
1.09 "Surviving Spouse" means a Participant's spouse
who is married to the Participant on the dates of the
Participant's death and retirement.
1.10 "Textron" means Textron Inc., a Delaware
corporation, and any successor of Textron Inc.
1.11 "Textron Company" means Textron or any company
controlled by or under common control with Textron.
1.12 "Textron Employment" means employment with a
Textron Company. Leaves of absence for such periods and
purposes as are approved by Textron and transfers of
employment within or between Textron Companies shall not be
deemed interruptions of Textron Employment.
1.13 "Textron Pension Plan" means the qualified Textron
Pension Plan, as amended and restated from time to time.
Article II - Participation
2.01 A Key Executive whose employment with a Textron
Company commenced at or after age forty-five (45) is
eligible for selection as a Participant. Participants are
selected by Textron's Chief Executive Officer.
2.02 Not withstanding any provision in this plan to the
contrary, the Organization and Compensation Committee of the
Board shall render all decisions under this Plan (including
participation, plan benefits and benefit distributions)
affecting Textron's Chief Executive Officer.
Article III - Benefit
3.01 Subject to Section 3.02, the benefit provided to
Participants who qualify for benefits under this Plan is an
annuity commencing upon retirement on or after the date the
Participant reaches age sixty-five (65) equal to 50% of
Average Pay.
3.02 The benefit provided by this Plan shall be reduced
by any and all amounts payable to the Participant under the
Textron Pension Plan, any Textron nonqualified pension plan
or any pension arrangement provided to the Participant by a
Textron Company or any prior employer. The qualified and
nonqualified Avco Financial Services, Inc. Profit Sharing
Retirement Plans are considered as pension plans for this
section of this Plan. It shall be the obligation of each
Participant to disclose to Textron any amounts which might
be used under this section to reduce the benefits provided
by this Plan. Such disclosure shall include information on
annuity payments and lump sum cash payments from other
plans.
3.03 One hundred percent of the benefit payable
hereunder shall be provided to a Participant if the
Participant has achieved at least fifteen years of
employment with a Textron Company prior to age 65. Textron's
Chief Executive Officer, in his sole discretion, may provide
a full, partial or no benefit to a Participant who has less
than fifteen years of Textron service at age 65 or whose
employment with a Textron Company ends prior to age 65.
3.04 A Participant's Surviving Spouse will receive an
annuity equal to 50% of the annuity provided to the
Participant by Textron, but only if the Surviving Spouse was
married to the Participant on the dates of the Participant's
death and retirement.
Article IV - Payment of Benefits
4.01 The payment of any benefit under Article III shall
be paid as an annuity or otherwise as determined by
Textron's Chief Executive Officer in his sole discretion
after considering any method of payment requested by the
Participant, Surviving Spouse, or other Beneficiary
entitled to receive the benefits.
Article V - Unfunded Plan
5.01 Benefits to be provided under this Plan are
unfunded obligations of Textron. Nothing contained in this
Plan shall require Textron to segregate any monies from its
general funds, to create any trust, to make any special
deposits, or to purchase any policies of insurance with
respect to such obligations. If Textron elects to purchase
individual policies of insurance on one or more of the
Participants to help finance its obligations under this
Plan, such individual policies and the proceeds therefrom
shall at all times remain the sole property of Textron and
neither the Participants whose lives are insured nor their
Beneficiaries shall have any ownership rights in such
policies of insurance.
5.02 This Plan is intended in part to provide benefits
for a select group of management employees who are highly
compensated, pursuant to Section 110 of the Employee
Retirement Income Security Act of 1974, as amended (ERISA)
and Labor Department Regulations Section 2520.104-23, and in
part to be an excess benefit plan, pursuant to Section 3(36)
of ERISA.
5.03 No Participant shall be required or permitted to
make contributions to this Plan.
Article VI - Plan Administration
6.01 Textron shall be the plan administrator of this
Plan and shall be solely responsible for its general
administration and interpretation. Textron shall have all
such powers as may be necessary to carry out the respective
provisions hereof. Textron may from time to time establish
rules for the administration of this Plan and the
transaction of its business. Subject to Section 6.03, any
action by Textron shall be final, conclusive and binding on
each Participant and all persons claiming by, through or
under any Participant.
6.02 Textron may employ or engage such agents,
accountants, actuaries, counsel, other experts and other
persons as it deems necessary or desirable in connection
with the interpretation and administration of this Plan.
Textron shall be entitled to rely upon all certifications
made by an accountant selected by Textron. Textron and its
committees, officers, directors and employees shall not be
liable for any action taken, suffered or omitted by them in
good faith in reliance upon the advice or opinion of any
such agent, accountant, actuary, counsel or other expert.
All action so taken, suffered or omitted shall be conclusive
upon each of them and upon all other persons interested in
this Plan.
6.03 Claims under this Plan shall be filed with Textron
on its prescribed forms. If a claim is denied, wholly or in
part, it shall be denied within a reasonable time after its
filing in writing delivered to the claimant with the reasons
for the denial, citations to pertinent provisions of the
Plan, a description of any additional material or
information to be furnished by the claimant and the reasons
therefor, and an explanation of the Plan's claim review
procedure. If the claimant wishes further consideration of
her claim, she or her authorized representative shall submit
to Textron within 90 days after her claim has been denied a
written request for a hearing. Such claimant or her
authorized representative may then review pertinent
documents and submit issues and comments in writing. Textron
shall schedule an opportunity for a full and fair hearing of
the issue within the next 60 days. Within 60 days after the
hearing Textron shall communicate its decision to the
claimant in writing, stating the reasons for its decision
and referring to pertinent Plan provisions.
6.04 Textron shall withhold from benefits paid under
this Plan any taxes or other amounts required to be withheld
by law.
Article VII - Miscellaneous
7.01 Unless a contrary or different meaning is
expressly provided, each use in this Plan of the masculine
or feminine gender shall include the other and each use of
the singular number shall include the plural.
7.02 No benefit payable at any time under this Plan
shall be subject in any manner to alienation, sale,
transfer, assignment, pledge or encumbrance of any kind
unless specifically approved in writing in advance by the
Benefits Committee or its designee. Any attempt to alienate,
sell, transfer, assign, pledge or otherwise encumber any
such benefit, whether presently of subsequently payable,
shall be void unless so approved. Except as required by law,
no benefit payable under this Plan shall in any manner be
subject to garnishment, attachment, execution or other legal
process, or be liable for or subject to the debts or
liability of a Participant, Surviving Spouse, or other
Beneficiary.
7.03 The Board or its designee shall have the right to
amend, modify, suspend or terminate this Plan at any time by
written notification of such action: provided, however, that
no amendment, modification, suspension or termination:
1) shall reduce any vested accrued benefit.
2) shall be made to Section 7.04 following a Change in
Control.
7.04 In the event that the Participant retires or his
employment otherwise terminates at any time after a "Change
in Control" as defined below, the Participant shall, in lieu
of the benefit payable under Section 3.01, and regardless of
his age at retirement or termination, receive a pro rata
portion of the benefit that would have been payable under
Section 3.01 in accordance with the following schedule or a
benefit determined by the Chief Executive Officer pursuant
to Section 3.03 of this Plan.
Years of Service % of Benefit
15 or more 100
14 95
13 90
12 85
11 80
10 75
Less than 10 0
For the purpose of this Plan, a "Change in Control" shall
occur if (i) any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Act")) other than Textron, any
trustee or other fiduciary holding Textron Common Stock
under an employee benefit plan of Textron or a related
company, or any corporation which is owned, directly or
indirectly, by the stockholders of Textron in substantially
the same proportions as their ownership of Textron Common
Stock, is or becomes the beneficial owner (as defined in
Rule 13d-3 under the Act) of more than thirty percent (30%)
of the then outstanding voting stock of Textron, or (ii)
during any period of two (2) consecutive years, individuals
who at the beginning of such period constitute the Board
(and any new director whose election by the Board or whose
nomination for election by Textron's stockholders was
approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at
the beginning of such period or whose election or nomination
for election was previously approved) cease for any reason
to constitute a majority thereof, or (iii) the shareholders
of Textron approve a merger or consolidation of Textron with
any other corporation, other than a merger or consolidation
which would result in the voting securities of Textron
outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity)
more than eighty percent (80%) of the combined voting
securities of Textron or such surviving entity out standing
immediately after such merger or consolidation, or (iv) the
shareholders of Textron approve a plan of complete
liquidation of Textron or an agreement for the sale or
disposition by Textron of all or substantially all of
Textron's assets.
7.04 This Plan shall be construed in accordance with
the laws of the State of Delaware.
7.05 Nothing contained in this Plan shall be construed
as a contract of employment between any Participant and any
Textron Company, or to suggest or create a right in any
Participant to be continued in any capacity with, or as an
employee of, any Textron Company.
IN WITNESS WHEREOF, Textron Inc. has caused this
restated Plan to be executed by its duly authorized officer
to be effective as of December 15, 1994.
TEXTRON INC.
By: /s/William F. Wayland
William F. Wayland
Executive Vice President
Administration and
Chief Human Resources Officer
Date: November 27, 1995
SURVIVOR BENEFIT PLAN FOR TEXTRON KEY EXECUTIVES
This Plan has been established for the benefit of certain
Textron Key Executives to secure their goodwill, loyalty and
achievement and to attract to and retain in the employ of
Textron Companies persons of outstanding competence.
This Plan as restated shall be effective from and after
January 1, 1994, except as otherwise provided.
Article I - Definitions
Whenever used in this document, the following terms shall
have the meanings set forth in this Article, unless a contrary
or different meaning is expressly provided:
1.01 "Base Salary" means the annual rate of base salary
of a Participant from a Textron Company at the time of the
Participant's death or termination of Textron Employment, as
applicable. "Base Salary" shall not include incentive
payments, bonuses, supplemental unemployment benefits,
contributions to any profit sharing or bonus plan, or expense
reimbursements. Any Base Salary, the receipt of which by the
Participant is deferred under the Textron Savings Plan or the
Deferred Income Plan for Textron Key Executives, shall be Base
Salary under this Plan. The Benefits Committee or its designee
shall determine whether a particular item of income
constitutes Base Salary if a question arises.
1.02 "Beneficiary" means the person or persons entitled
under Article V to receive a Survivor Benefit after a
Participant's death.
1.03 "Benefits Committee" means the Benefits Committee
appointed by the Board.
1.04 "Board" means the Board of Directors of Textron.
1.05 "Key Executive" means an employee of a Textron
Company who has been and continues to be designated a Key
Executive under the Plan by Textron's Chief Executive Officer
and the Chief Human Resources Officer.
1.06 "Participant" means a present Key Executive or a
former Key Executive who continues to be designated a
Participant under the Plan by Textron's Chief Executive
Officer and Chief Human Resources Officer.
1.07 "Plan" means this Survivor Benefit Plan for Textron
Key Executives, as amended from time to time.
1.08 "Survivor Benefit" means a benefit payable under
Article III of this Plan.
1.09 "Textron" means Textron Inc., a Delaware
corporation, and any successor of
Textron Inc.
1.10 "Textron Company" means Textron or any company
controlled by or under common control with Textron.
1.11 "Textron Employment" means employment with a Textron
Company. Leaves of absence for such periods and purposes as
are approved by Textron and transfers of employment within or
between Textron Companies shall not be deemed interruptions of
Textron Employment.
1.12 "Total Disability" has the same meaning under this
Plan as in the Textron Pension Plan with respect to any
Participant at the date his Textron Employment ends.
Article II - Participation
The Chief Executive Officer and the Chief Human Resources
Officer of Textron shall designate from time to time the
present and former Key Executives who shall be Participants in
this Plan. A Beneficiary shall be eligible for benefits only
as hereinafter provided.
Article III - Survivor Benefit
3.01 If a Key Executive's Textron Employment ends because
of death, his Beneficiary shall receive a Survivor Benefit
equal to three times the Key Executive's Base Salary at the
time of his death.
3.02 If a Participant's Textron Employment ends (a) at or
after age 62 (other than for less than acceptable
performance), (b) as a result of Total Disability, or (c)
under circumstances approved in writing for this specific
purpose by the Chief Executive Officer and the Chief Human
Resources Officer of Textron, or because of death while she is
no longer a Key Executive, her Beneficiary shall receive upon
her death a Survivor Benefit equal to two times the
Participant's Base Salary at the time her Textron Employment
ended.
3.03 If a Participant's Textron Employment ends other
than as described in Sections 3.01 or 3.02, no Survivor
Benefit shall be payable on his account.
Article IV - Payment of Survivor Benefit
4.01 The Benefits Committee or its designee shall choose
in its sole discretion the method described in Section 4.02 by
which a Survivor Benefit payable under Article III shall be
distributed, after considering any method of payment requested
by the Participant or by the Beneficiary entitled to receive
the benefit.
4.02 As soon as practicable after a Survivor Benefit
becomes payable under Article III, Textron, upon the written
instructions of the Benefits Committee or its designee, shall
distribute the benefit in accordance with any one of the
following methods:
(1) payment in a single sum; or
(2) payment in a number of annual installments, each
payable as soon as practicable after the end of each
successive calendar year, over a period not exceeding ten
years from the date on which the benefit first becomes
payable. The annual installments shall be calculated in a
manner which provides substantially equal installments or
shall be calculated each year by dividing the unpaid amount of
the benefit as of January 1 of that year by the remaining
number of unpaid installments; or
(3) payment through a combination of the foregoing
methods.
4.03 Simple interest shall be credited on any unpaid
balance of a Survivor Benefit based on an annualized average
of the monthly Moody's Corporate Bond Yield Index as published
by Moody's Investors Service, Inc. (or any successor thereto),
or, if such average is no longer published, a substantially
similar average selected by the Benefits Committee.
4.04 (1) Notwithstanding any Plan provision to the
contrary, upon a Change in Control as defined in Section 8.03,
Textron shall transfer the assets described in Section 4.04(2)
and 4.04(4) to each Participant who is then a Key Executive,
and to each former Key Executive described in Section 3.02 or
his Beneficiary.
(2) The assets transferable under Section 4.04(1) shall
consist of life insurance, cash or a combination of life
insurance and cash. The target value of the assets to be
transferred shall equal: (a) two times the transferee's Base
Salary immediately before the Change in Control, if her
Textron Employment had not ended before that date; (b) two
times the transferee's Base Salary at the time her Textron
Employment ended, if she is then a former employee; or (c) the
balance of the Survivor Benefit, calculated as of immediately
before the Change in Control, if the transferee is a
Beneficiary.
(3) For the purposes of Sections 4.04, the value of
transferred assets shall consist of: (a) the face amount of
one or more paid-up, non-cancellable life insurance policies
(or portions of such policies) purchased from Pacific Mutual
Life Insurance Company or a successor company or similarly-
rated company, naming the Key Executive or former Key
Executive as owner thereof and insured thereunder, and naming
his Beneficiary or other person(s) designated by him as
beneficiary thereof, and (b) in the case of cash transferred
under Section 4.04(1) to a Beneficiary, the amount of that
cash.
(4) Upon a Change in Control, Textron shall make good
faith efforts to transfer to each Key Executive or former Key
Executive described in Section 4.04(1) transferred life
insurance equal in value to the target value, as defined in
Section 4.04(2), for that individual. If Textron is unable to
transfer sufficient transferred life insurance, Textron shall
pay a cash payment forthwith to the individual in a mutually-
agreed amount.
Article V - Beneficiaries
5.01 A Participant may designate one or more
Beneficiaries to receive a Survivor Benefit payable on the
Participant's account under this Plan. A Beneficiary may
designate one or more Beneficiaries to receive any unpaid
balance of a Survivor Benefit, to the extent this designation
does not contravene any designation filed by the deceased
Participant through whom the Beneficiary himself claims under
this Plan. Beneficiaries shall be designated only upon forms
made available by or satisfactory to the Benefits Committee or
its designee and filed by the Participant or Beneficiary with
that committee or designee.
5.02 At any time prior to her death, a Participant or
Beneficiary may change her own designation of Beneficiary by
filing a substitute designation of Beneficiary with the
Benefits Committee or its designee.
5.03 In the absence of an effective designation of
Beneficiary, or if all persons so designated shall have
predeceased the Participant or shall have died before the
Survivor Benefit has been fully distributed, the balance of
the Survivor Benefit shall be paid to the Participant's
surviving spouse or, if none, to the Participant's issue per
stirpes or, if no issue, to the executor or administrator of
the Participant's or Beneficiary's estate or as otherwise
determined by the Benefits Committee in its sole discretion.
5.04 If a Participant's Base Salary or a Survivor Benefit
is community property, any
designation of Beneficiary shall be valid or effective only as
permitted under applicable law.
5.05 If a Survivor Benefit is payable to a minor or
person declared incompetent or to a person incapable of
handling the disposition of his property, the Benefits
Committee may direct Textron to pay such Survivor Benefit to
the guardian, legal representative or person having the care
and custody of such minor, incompetent or person. The Benefits
Committee may require proof of incompetency, minority,
incapacity or guardianship as it deems appropriate prior to
distribution of the Survivor Benefit. Such distribution shall
completely discharge the Benefits Committee and any Textron
Company from all liability with respect to such benefit.
Article VI - Unfunded Plan
6.01 Benefits to be provided under this Plan are unfunded
obligations of Textron. Nothing contained in this Plan shall
require Textron to segregate any monies from its general
funds, to create any trust, to make any special deposits, or
to purchase any policies of insurance with respect to such
obligations. If Textron elects to purchase individual policies
of insurance on one or more of the Participants to help
finance its obligations under this Plan, then, except as
provided in Section 4.04, such individual policies and the
proceeds therefrom shall at all times remain the sole property
of Textron, and neither the Participants whose lives are
insured nor their Beneficiaries shall have any ownership
rights in such policies of insurance.
6.02 This Plan is intended to be a welfare plan providing
benefits for a select group of management employees who are
highly compensated, pursuant to Sections 3(1) and 104(a)(3) of
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Labor Department Regulations Section
2520.104-24.
6.03 No Participant shall be required or permitted to
make contributions to this Plan.
Article VII - Plan Administration
7.01 Textron shall be the plan administrator of this Plan
and shall be solely responsible for its general administration
and interpretation. Textron shall have all such powers as may
be necessary to carry out the respective provisions hereof.
Textron may from time to time establish rules for the
administration of this Plan and the transaction of its
business. Subject to Section 7.04, any action by Textron shall
be final, conclusive and binding on each Participant and all
persons claiming by, through or under any Participant.
7.02 Textron may employ or engage such agents,
accountants, actuaries, counsel, other experts and other
persons as it deems necessary or desirable in connection with
the interpretation and administration of this Plan. Textron
shall be entitled to rely upon all certifications made by an
accountant selected by Textron. Textron and its committees,
officers, directors and employees shall not be liable for any
action taken, suffered or omitted by them in good faith in
reliance upon the advice or opinion of any such agent,
accountant, actuary, counsel or other expert. All action so
taken, suffered or omitted shall be conclusive upon each of
them and upon all other persons interested in this Plan.
7.03 Textron may require proof of the death or Total
Disability of any Participant or Beneficiary and evidence of
the right of any person to receive any Survivor Benefit.
7.04 Claims under this Plan shall be filed with Textron
on its prescribed forms. If a claim is denied, wholly or in
part, it shall be denied within a reasonable time after its
filing in a writing delivered to the claimant with the reasons
for the denial, citations to pertinent provisions of the Plan,
a description of any additional material or information to be
furnished by the claimant and the reasons therefor, and an
explanation of the Plan's claim review procedure. If the
claimant wishes further consideration of her claim, she or her
authorized representative shall submit to Textron, within 90
days after her claim has been denied, a written request for a
hearing. Such claimant or her authorized representative may
then review pertinent documents and submit issues and comments
in writing. Textron shall schedule an opportunity for a full
and fair hearing of the issue within the next 60 days. Within
60 days after the hearing, Textron shall communicate its
decision to the claimant in writing, stating the reasons for
its decision and referring to pertinent Plan provisions.
7.05 Textron shall withhold from benefits paid under this
Plan any taxes or other amounts required to be withheld by
law.
ARTICLE VIII - Miscellaneous
8.01 Unless a contrary or different meaning is expressly
provided, each use in this Plan of the masculine or feminine
gender shall include the other and each use of the singular
number shall include the plural.
8.02 No Survivor Benefit shall be subject in any manner
to alienation, sale, transfer, assignment, pledge or
encumbrance of any kind unless specifically approved in
writing in advance by the Benefits Committee or its designee.
Any attempt to alienate, sell, transfer, assign, pledge or
otherwise encumber any Survivor Benefit, whether presently or
subsequently payable, shall be void unless so approved. Except
as required by law, no Survivor Benefit payable under this
Plan shall in any manner be subject to garnishment,
attachment, execution or other legal process, or be liable for
or subject to the debts or liability of any Participant or
Beneficiary.
8.03 Notwithstanding any Plan provision to the contrary,
the Board or its designee shall have the right to amend,
modify, suspend or terminate this Plan at any time by written
ratification of such action; provided, however, that no
amendment, modification, suspension or termination:
(1) shall adversely affect the right of a Beneficiary to
receive a Survivor Benefit, as described in Article IV,
payable as the result of the Participant's death or action
taken pursuant to Section 3.02 that occurred before the
effective date of such amendment, modification, suspension or
termination; or
(2) shall be made to Article IV or this Section 8.03
following a Change in Control.
If after a Change in Control any claim is made or any
litigation is brought by a Participant or Beneficiary to
enforce or interpret any provision contained in this Plan,
Textron and the "person" or "group" described in the next
following sentence shall be liable, jointly and severally, to
indemnify the Participant or Beneficiary for the Participant's
or Beneficiary's reasonable attorney's fees and disbursements
incurred in any such claim or litigation and for prejudgment
interest at the Bankers Trust Company prime interest rate on
any money award or judgment obtained by the Participant or
Beneficiary.
For purposes of this Plan, a "Change in Control" shall occur
if (i) any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Act")) other than Textron, any trustee or other
fiduciary holding Textron Common Stock under an employee
benefit plan of Textron or a related company, or any
corporation which is owned, directly or indirectly, by the
stockholders of Textron in substantially the same proportions
as their ownership of Textron Common Stock, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act) of
more than 30% of the then outstanding voting stock of Textron,
or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board (and any new director whose election by the Board or
whose nomination for election by the stockholders of Textron
was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the
beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority thereof, or (iii) the stockholders of
Textron approve a merger or consolidation of Textron with any
other corporation, other than a merger or consolidation which
would result in the voting securities of Textron outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than 80% of the
combined voting power of the voting securities of Textron or
such surviving entity outstanding immediately after such
merger or consolidation, or (iv) the stockholders of Textron
approve a plan of complete liquidation of Textron or an
agreement for the sale or disposition by Textron of all or
substantially all of Textron's assets.
8.04 This Plan shall be construed in accordance with the
laws of the State of Delaware.
8.05 Nothing contained in this Plan shall be construed as
a contract of employment between any Participant and any
Textron Company, or to suggest or create a right in any
Participant to be continued in employment as a Key Executive
or other employee of any Textron Company.
8.06 Textron, the Chief Executive Officer and the Chief
Human Resources Officer, and the Benefits Committee may impose
such other lawful terms and conditions on participation in
this Plan as deemed desirable. The Chief Executive Officer,
the Chief Human Resources Officer and members of the Benefits
Committee may participate in this Plan.
IN WITNESS WHEREOF, Textron Inc. has caused this restated
Plan to be executed by its duly authorized officer to be
effective as of January 1, 1994.
TEXTRON INC.
By: /s/William F. Wayland
William F. Wayland
Executive Vice President
Administration and
Chief Human Resources Officer
Date: November 27, 1995
12/19/95
Lewis B. Campbell
Retention Award
At its December 14, 1995 meeting, the Organization and
Compensation Committee of the Board of Directors approved a
25,000 share retention award for Lewis B. Campbell (the
"Executive"). The terms of the award are as follows:
- - The Executive will receive the cash equivalent of
25,000 shares of Textron common stock provided he remains in
Textron's employment through January 1, 2001.
- - The cash payment will equal 25,000 times the average of
the composite closing prices (as reported on the New York
Stock Exchange consolidated tape) of Textron's common stock
for the first ten trading days following January 1, 2001.
Such award shall be paid to the Executive in a lump sum or
in annual installments as may be determined by the
Organization and Compensation Committee of the Board of
Directors.
- - Except as otherwise provided herein, the Executive
shall not be entitled to receive such award if his
employment with Textron ends for any reason prior to January
1, 2001, provided that if the Executive's employment ends
prior to such date because of his disability or death, the
Executive or the Executive's estate may receive a pro-rata
portion of the award in the discretion of Textron's Board of
Directors.
- - Notwithstanding the above, if the Executive's
employment terminates at any time after a "change in
control" (as defined in the Textron 1994 Long-Term Incentive
Plan), Textron shall, in lieu of the above award, award to
the Executive (or to the Executive's estate in the event of
his death prior to payment) upon such termination of
employment, a cash amount equal to 25,000 times the highest
closing price per share of Textron's common stock (as
reported on the New York Stock Exchange consolidated tape)
during the 30 day period ending on the date of such change
in control.
- - Effective January 1, 1996, dividend equivalents shall
be credited to the Executive and such dividend equivalents
are to be accounted for as if reinvested in actual Textron
common stock. Such dividend shares shall be paid at the
same time as the retention shares and paid only if the
retention shares are paid.
- - The number of retention shares awarded to the Executive
hereunder shall be proportionately adjusted for any increase
or decrease in the number of issued shares of Textron's
common stock resulting from a stock split, stock dividend or
any other increase or decrease in such shares effective
without receipt of consideration by Textron.
Approved by the Organization and Compensation Committee of
the Board of Directors December 14, 1995.
/s/ W. F. Wayland Date January 16, 1996
Accepted: /s/ L.B. Campbell Date January 23, 1996
- -
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 1, 1995, between Textron
Inc., a Delaware corporation (the "Corporation"), and Wayne W.
Juchatz (the "Executive").
WHEREAS, the Corporation currently employs the Executive in
the position of Executive Vice President and General Counsel and
desires to continue such employment during the term of this
Agreement, and the Executive is willing to continue such
employment upon the terms and conditions set forth below;
NOW THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, the
parties hereto hereby agree as follows:
1. Employment.
The Corporation hereby employs and engages the services of
the Executive as one of its key principal executive officers
with the initial position of Executive Vice President and
General Counsel of the Corporation for the "term of
employment" set forth in Section 2 of this Agreement. The
Executive agrees to serve the Corporation in such position
as set forth in Section 3 of this Agreement for the term of
employment.
2. Term of Employment.
The Executive's "term of employment" (as that phrase is used
herein) shall continue in effect through and including
December 31, 1997, provided, however, that on January 1 of
each year during the term of employment, commencing January
1, 1996, the term of employment shall automatically be
extended for an additional year unless prior to such January
1 the Corporation gives written notice to the Executive of
the Corporation's intention not to so extend the term of
employment, and provided, further, that in the event the
Executive's status is converted to that of an
employee-consultant pursuant to Section 6(b) of this
Agreement, the Executive's term of employment shall expire
no earlier than the second anniversary of the effective date
of such conversion.
3. Position and Duties.
(a) During the term of employment the Executive's
position, authority and responsibilities, the type of
work he is asked to perform, and the status and stature
of the people with whom he is asked to work, shall not
be diminished during the term of employment, and the
Executive's services shall be performed at the
Corporation's headquarters in Providence, Rhode Island
or at such other location (i) as may be mutually agreed
between the Corporation and the Executive or (ii) to
which the Corporation's corporate headquarters is
relocated.
(b) The Executive agrees to devote his full business
time during normal business hours to the business and
affairs of the Corporation (except as otherwise
provided herein) and to use his best efforts to promote
the interests of the Corporation and to perform
faithfully and efficiently the responsibilities
assigned to him in accordance with the terms of this
Agreement, to the extent necessary to discharge such
responsibilities, except for (i) services on corporate,
civic or charitable boards or committees not
significantly interfering with the performance of such
responsibilities and (ii) periods of vacation and sick
leave to which he is entitled. It is expressly
understood and agreed that the Executive's continuing
service on any boards and committees with which he
shall be connected, as a member or otherwise, as of the
date hereof, or any such service approved by the
Corporation during the term of employment, shall not be
deemed to interfere with the performance of the
Executive's services to the Corporation pursuant to
this paragraph (b).
4. Compensation and Other Terms of Employment.
(a) Base Salary. During the term of employment, the
Executive shall receive an annual base salary ("Base
Salary"), payable in equal monthly installments, at an
annual rate at least equal to the aggregate annual base
salary payable to the Executive by the Corporation at
the commencement of the term of employment. The Base
Salary shall be reviewed and may be increased at any
time and from time to time in accordance with the
Corporation's regular practices. Any increase in the
Base Salary shall not serve to limit or reduce any
other obligation of the Corporation hereunder, and
after any such increase the Base Salary shall not be
reduced from such increased level.
(b) Incentive Plans. As further compensation, the
Executive will be eligible during the term of
employment for participation in the Corporation's
short-term incentive compensation plan in a
participation level commensurate with his level of
employment. The Executive shall also be eligible
during the term of employment for awards of stock
options and performance units under the Corporation's
long-term incentive plan. In the event such plans are
amended or superseded, the Executive shall be entitled
to participate in the amended or successor plan at a
level substantially equivalent to his participation in
the plans immediately prior to such amendment or
succession. Any agreements existing as of the date
hereof between the Corporation and the Executive
providing for special incentive or similar benefits are
continued by this Agreement.
(c) Retirement, Savings and Other Executive Plans. In
addition to the Base Salary and incentive plans as
hereinabove provided, during the term of employment the
Executive shall be entitled to participate in all
savings, retirement, employee benefit and key executive
plans generally available to executive officers of the
Corporation. Nothing herein shall be construed to
prevent the Corporation from amending or terminating
any such plans to the extent currently permitted by the
terms of such plans. Any agreements existing as of the
date hereof between the Corporation and the Executive
providing for special pension, retirement or similar
benefits are continued by this Agreement.
(d) Expenses. During the term of employment, the
Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by
the Executive in accordance with the policies and
procedures of the Corporation in effect as of the date
hereof.
(e) Office and Support Staff. During the term of
employment, the Executive shall be entitled to an
office or offices of a size and with furnishings and
other appointments, and to secretarial and other
assistance, commensurate with his level of employment.
(f) Vacation and Fringe Benefits. During the term of
employment, the Executive shall be entitled to paid
vacation and fringe benefits (including, but not
limited to, travel facilities) in accordance with the
policies of the Corporation in effect as of the date
hereof.
5. Termination.
(a) Death. Except for the obligations of the
Corporation set forth in this paragraph (a), this
Agreement shall terminate automatically upon the
Executive's death. In the event of such termination,
the Corporation shall pay to the Executive's estate all
benefits and compensation accrued hereunder through the
end of the month in which the Executive died.
(b) Cause. The Corporation may terminate the
Executive's employment for Cause. For purposes of the
Agrement, "Cause" shall mean (i) an act or acts of
dishonesty on the Executive's part which are intended
to result in his substantial personal enrichment at the
expense of the Corporation or (ii) any material
violation by the Executive of his responsibilities set
forth in Section 3 or Section 6(c) hereof which are
demonstrably willful and deliberate on the Executive's
part and which result in material injury to the
Corporation or (iii) any material violation by the
Executive of Textron's Business Conduct Guidelines.
If the Executive's employment is terminated for
Cause, the Corporation shall pay the Executive his full
accrued Base Salary through the date of such
termination at the rate in effect at the time of such
termination, and the Corporation shall have no further
obligations to the Executive under this Agreement.
6. Consulting Services.
(a) In the event of the Executive's Disability (as
hereinafter defined), the Executive's status shall
automatically become that of an employee-consultant for
the remainder of the term of employment. During such
period, the Executive shall be required to provide
services to the Corporation in accordance with
paragraph (c) of this Section 6, but only to the extent
the Executive has the ability to provide such services.
Upon the completion of the term of employment, the
Executive shall be entitled to receive (in addition to
any other payments and benefits accrued as of such
time) such disability benefits and other benefits as
may be payable to the Executive under the terms of the
employee benefit plans referred to in Section 4(c)
hereof. "Disability" shall mean a disability which
prevents the Executive from performing the services
contemplated by Section 3 hereof for the entire
remainder of the term of employment.
(b) Notwithstanding any other provisions contained in
this Agreement, the Corporation, at its option for any
reason, or the Executive, for Good Reason (as
hereinafter defined), may convert the Executive's
status into that of an employee-consultant for the
remainder of the term of employment in accordance with
the procedures set forth in this paragraph (b). In the
event the Corporation determines that the Executive
shall no longer hold his present position or the
Corporation intends to effect any change in the
Executive's employment status that would constitute
Good Reason, the Corporation shall give notice to the
Executive of such determination or intention. In the
event that the Executive claims that the Corporation
has taken any action constituting Good Reason, the
Executive shall give notice to the Corporation of such
claim. In either event, the parties shall meet and
attempt to reach a mutually satisfactory adjustment of
the terms of the Executive's employment; provided,
however, that the Executive shall not be obligated to
accept any change in the terms of his employment
proposed by the Corporation. If the Corporation and
the Executive cannot reach a mutually satisfactory
adjustment, either the Corporation or the Executive may
then convert the Executive's status to that of an
employee-consultant.
"Good Reason" shall mean:
(i) without the express written consent of
the Executive, (A) the assignment of the Executive
to any duties or location inconsistent in any
significant respect with the provisions of Section
3(a) hereof, or (B) any other significant change
in the position, authority or responsibilities of
the Executive (except as permitted by this Section
6);
(ii) any failure by the Corporation to comply
with any of the provisions of Section 4 hereof,
other than an insubstantial and inadvertent
failure remedied by the Corporation promptly after
receipt of notice thereof given by the Executive;
or
(iii) any purported termination by the
Corporation of the Executive's employment
hereunder other than in accordance with, and as
permitted by, this Agreement, it being understood
and agreed that any such purported termination
shall not be effective for any purpose of this
Agreement.
(c) In the event the Executive's status is converted
to that of an employee-consultant as provided in this
Section 6, the Executive shall continue to be a
full-time employee of the Corporation and shall, except
as limited by paragraph (a) of this Section 6, provide
such advisory services concerning the business of the
Corporation, of the same type and stature performed by
the Executive prior to the conversion of his status to
employee-consultant, as may reasonably be requested by
the Corporation. The period during which the Executive
serves as an employee-consultant pursuant to this
Section 6 shall for all purposes of this Agreement be
considered part of the term of employment. During such
period, the Corporation shall continue to be bound by,
and obligated to perform in all respects, all of the
provisions of Section 4 hereof (except Section 4(e)),
and, to the extent not inconsistent with this Section
6, all of the other provisions of the Agreement shall
continue in full force and effect. During such period,
the Executive shall not engage in any activities in
competition with the Corporation and shall continue to
be deemed an employee under all benefit plans and
programs of the Corporation.
7. Non-Exclusivity of Rights.
(a) Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in
any benefit, bonus, incentive or other plan or program
provided by the Corporation or any of its affiliated
companies and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such
rights as the Executive may have under any stock option
or other agreements with the Corporation or any of its
affiliated companies. Amounts which are vested
benefits or which the Executive is otherwise entitled
to receive under any plan or program of the Corporation
or any of its affiliated companies shall be payable in
accordance with the terms of such plan or program.
(b) Notwithstanding the foregoing, and in
consideration of the premises contained in this
Agreement, the Executive specifically waives any rights
he may have to receive any severance pay or other
severance benefits under the Textron Executive
Severance Plan and any other severance plan, program or
agreement of the Corporation.
8. No Set-Off; Legal Fees.
The Corporation's obligation to make the payments provided
for herein and otherwise to perform its obligations
hereunder shall not be affected by any circumstances,
including without limitation any set-off, counter-claim,
recoupment, defense or other right which the Corporation may
have against the Executive or others. Unless it is finally
determined by a court of competent jurisdiction after all
available appeals that the Corporation has validly
terminated the Executive's employment for Cause, the
Corporation agrees to pay, to the full extent permitted by
law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the
Corporation or others of the validity or enforceability of,
or liability under, any provision of this Agreement or any
guarantee of performance thereof, plus interest on the total
unpaid amount determined to be payable hereunder, such
interest to be calculated on the basis of the prime
commercial lending rate announced by Morgan Guaranty Trust
Company in effect from time to time, for the period
commencing on the date of such contest and ending on the
date on which the Corporation shall pay such total amount
(such interest to be compounded quarterly).
9. Confidential Information.
The Executive shall hold in a fiduciary capacity for the
benefit of the Corporation all secret or confidential
information, knowledge or data relating to the Corporation
or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive
during his employment by the Corporation or any of its
affiliated companies and which shall not be public
knowledge. During and after the end of the term of
employment, the Executive shall not, without the prior
written consent of the Corporation, communicate or divulge
any such information, knowledge or data to anyone other than
the Corporation and those designated by it.
10. No Assignment.
This Agreement is personal to the Executive and without the
prior written consent of the Corporation shall not be
assignable by the Executive other than by will or the laws
of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal
representatives.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws.
The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified other
than by a written agreement executed by the parties
hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery
to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Wayne W. Juchatz
199 Rumstick Road
Barrington, RI 02806
If to the Corporation:
Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
or to such other address as either party shall
have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the
validity or enforceability of any other provision of
this Agreement.
(d) The Corporation may withhold from any amounts
payable under this Agreement such federal, state or
local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) This Agreement contains the entire understanding
of the parties hereto with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the day and year first above written.
/s/ Wayne W. Juchatz
Wayne W. Juchatz
TEXTRON INC.
By:/s/ William F. Wayland
William F. Wayland
Executive Vice President
Administration and
Chief Human Resources Officer
ATTEST:
/s/Michael D. Cahn
Michael D. Cahn
Assistant Secretary
(SEAL)
- -
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 1, 1995, between Textron
Inc., a Delaware corporation (the "Corporation"), and Stephen L.
Key (the "Executive").
WHEREAS, the Corporation currently employs the Executive in
the position of Executive Vice President and Chief Financial
Officer and desires to continue such employment during the term
of this Agreement, and the Executive is willing to continue such
employment upon the terms and conditions set forth below;
NOW THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, the
parties hereto hereby agree as follows:
1. Employment.
The Corporation hereby employs and engages the services of
the Executive as one of its key principal executive officers
with the initial position of Executive Vice President and
Chief Financial Officer of the Corporation for the "term of
employment" set forth in Section 2 of this Agreement. The
Executive agrees to serve the Corporation in such position
as set forth in Section 3 of this Agreement for the term of
employment.
2. Term of Employment.
The Executive's "term of employment" (as that phrase is used
herein) shall continue in effect through and including
December 31, 1997, provided, however, that on January 1 of
each year during the term of employment, commencing January
1, 1996, the term of employment shall automatically be
extended for an additional year unless prior to such January
1 the Corporation gives written notice to the Executive of
the Corporation's intention not to so extend the term of
employment, and provided, further, that in the event the
Executive's status is converted to that of an
employee-consultant pursuant to Section 6(b) of this
Agreement, the Executive's term of employment shall expire
no earlier than the second anniversary of the effective date
of such conversion.
3. Position and Duties.
(a) During the term of employment the Executive's
position, authority and responsibilities, the type of
work he is asked to perform, and the status and stature
of the people with whom he is asked to work, shall not
be diminished during the term of employment, and the
Executive's services shall be performed at the
Corporation's headquarters in Providence, Rhode Island
or at such other location (i) as may be mutually agreed
between the Corporation and the Executive or (ii) to
which the Corporation's corporate headquarters is
relocated.
(b) The Executive agrees to devote his full business
time during normal business hours to the business and
affairs of the Corporation (except as otherwise
provided herein) and to use his best efforts to promote
the interests of the Corporation and to perform
faithfully and efficiently the responsibilities
assigned to him in accordance with the terms of this
Agreement, to the extent necessary to discharge such
responsibilities, except for (i) services on corporate,
civic or charitable boards or committees not
significantly interfering with the performance of such
responsibilities and (ii) periods of vacation and sick
leave to which he is entitled. It is expressly
understood and agreed that the Executive's continuing
service on any boards and committees with which he
shall be connected, as a member or otherwise, as of the
date hereof, or any such service approved by the
Corporation during the term of employment, shall not be
deemed to interfere with the performance of the
Executive's services to the Corporation pursuant to
this paragraph (b).
4. Compensation and Other Terms of Employment.
(a) Base Salary. During the term of employment, the
Executive shall receive an annual base salary ("Base
Salary"), payable in equal monthly installments, at an
annual rate at least equal to the aggregate annual base
salary payable to the Executive by the Corporation at
the commencement of the term of employment. The Base
Salary shall be reviewed and may be increased at any
time and from time to time in accordance with the
Corporation's regular practices. Any increase in the
Base Salary shall not serve to limit or reduce any
other obligation of the Corporation hereunder, and
after any such increase the Base Salary shall not be
reduced from such increased level.
(b) Incentive Plans. As further compensation, the
Executive will be eligible during the term of
employment for participation in the Corporation's
short-term incentive compensation plan in a
participation level commensurate with his level of
employment. The Executive shall also be eligible
during the term of employment for awards of stock
options and performance units under the Corporation's
long-term incentive plan. In the event such plans are
amended or superseded, the Executive shall be entitled
to participate in the amended or successor plan at a
level substantially equivalent to his participation in
the plans immediately prior to such amendment or
succession. Any agreements existing as of the date
hereof between the Corporation and the Executive
providing for special incentive or similar benefits are
continued by this Agreement.
(c) Retirement, Savings and Other Executive Plans. In
addition to the Base Salary and incentive plans as
hereinabove provided, during the term of employment the
Executive shall be entitled to participate in all
savings, retirement, employee benefit and key executive
plans generally available to executive officers of the
Corporation. Nothing herein shall be construed to
prevent the Corporation from amending or terminating
any such plans to the extent currently permitted by the
terms of such plans. Any agreements existing as of the
date hereof between the Corporation and the Executive
providing for special pension, retirement or similar
benefits are continued by this Agreement.
(d) Expenses. During the term of employment, the
Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by
the Executive in accordance with the policies and
procedures of the Corporation in effect as of the date
hereof.
(e) Office and Support Staff. During the term of
employment, the Executive shall be entitled to an
office or offices of a size and with furnishings and
other appointments, and to secretarial and other
assistance, commensurate with his level of employment.
(f) Vacation and Fringe Benefits. During the term of
employment, the Executive shall be entitled to paid
vacation and fringe benefits (including, but not
limited to, travel facilities) in accordance with the
policies of the Corporation in effect as of the date
hereof.
5. Termination.
(a) Death. Except for the obligations of the
Corporation set forth in this paragraph (a), this
Agreement shall terminate automatically upon the
Executive's death. In the event of such termination,
the Corporation shall pay to the Executive's estate all
benefits and compensation accrued hereunder through the
end of the month in which the Executive died.
(b) Cause. The Corporation may terminate the
Executive's employment for Cause. For purposes of the
Agrement, "Cause" shall mean (i) an act or acts of
dishonesty on the Executive's part which are intended
to result in his substantial personal enrichment at the
expense of the Corporation or (ii) any material
violation by the Executive of his responsibilities set
forth in Section 3 or Section 6(c) hereof which are
demonstrably willful and deliberate on the Executive's
part and which result in material injury to the
Corporation or (iii) any material violation by the
Executive of Textron's Business Conduct Guidelines.
If the Executive's employment is terminated for
Cause, the Corporation shall pay the Executive his full
accrued Base Salary through the date of such
termination at the rate in effect at the time of such
termination, and the Corporation shall have no further
obligations to the Executive under this Agreement.
6. Consulting Services.
(a) In the event of the Executive's Disability (as
hereinafter defined), the Executive's status shall
automatically become that of an employee-consultant for
the remainder of the term of employment. During such
period, the Executive shall be required to provide
services to the Corporation in accordance with
paragraph (c) of this Section 6, but only to the extent
the Executive has the ability to provide such services.
Upon the completion of the term of employment, the
Executive shall be entitled to receive (in addition to
any other payments and benefits accrued as of such
time) such disability benefits and other benefits as
may be payable to the Executive under the terms of the
employee benefit plans referred to in Section 4(c)
hereof. "Disability" shall mean a disability which
prevents the Executive from performing the services
contemplated by Section 3 hereof for the entire
remainder of the term of employment.
(b) Notwithstanding any other provisions contained in
this Agreement, the Corporation, at its option for any
reason, or the Executive, for Good Reason (as
hereinafter defined), may convert the Executive's
status into that of an employee-consultant for the
remainder of the term of employment in accordance with
the procedures set forth in this paragraph (b). In the
event the Corporation determines that the Executive
shall no longer hold his present position or the
Corporation intends to effect any change in the
Executive's employment status that would constitute
Good Reason, the Corporation shall give notice to the
Executive of such determination or intention. In the
event that the Executive claims that the Corporation
has taken any action constituting Good Reason, the
Executive shall give notice to the Corporation of such
claim. In either event, the parties shall meet and
attempt to reach a mutually satisfactory adjustment of
the terms of the Executive's employment; provided,
however, that the Executive shall not be obligated to
accept any change in the terms of his employment
proposed by the Corporation. If the Corporation and
the Executive cannot reach a mutually satisfactory
adjustment, either the Corporation or the Executive may
then convert the Executive's status to that of an
employee-consultant.
"Good Reason" shall mean:
(i) without the express written consent of
the Executive, (A) the assignment of the Executive
to any duties or location inconsistent in any
significant respect with the provisions of Section
3(a) hereof, or (B) any other significant change
in the position, authority or responsibilities of
the Executive (except as permitted by this Section
6);
(ii) any failure by the Corporation to comply
with any of the provisions of Section 4 hereof,
other than an insubstantial and inadvertent
failure remedied by the Corporation promptly after
receipt of notice thereof given by the Executive;
or
(iii) any purported termination by the
Corporation of the Executive's employment
hereunder other than in accordance with, and as
permitted by, this Agreement, it being understood
and agreed that any such purported termination
shall not be effective for any purpose of this
Agreement.
(c) In the event the Executive's status is converted
to that of an employee-consultant as provided in this
Section 6, the Executive shall continue to be a
full-time employee of the Corporation and shall, except
as limited by paragraph (a) of this Section 6, provide
such advisory services concerning the business of the
Corporation, of the same type and stature performed by
the Executive prior to the conversion of his status to
employee-consultant, as may reasonably be requested by
the Corporation. The period during which the Executive
serves as an employee-consultant pursuant to this
Section 6 shall for all purposes of this Agreement be
considered part of the term of employment. During such
period, the Corporation shall continue to be bound by,
and obligated to perform in all respects, all of the
provisions of Section 4 hereof (except Section 4(e)),
and, to the extent not inconsistent with this Section
6, all of the other provisions of the Agreement shall
continue in full force and effect. During such period,
the Executive shall not engage in any activities in
competition with the Corporation and shall continue to
be deemed an employee under all benefit plans and
programs of the Corporation.
7. Non-Exclusivity of Rights.
(a) Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in
any benefit, bonus, incentive or other plan or program
provided by the Corporation or any of its affiliated
companies and for which the Executive may qualify, nor
shall anything herein limit or otherwise affect such
rights as the Executive may have under any stock option
or other agreements with the Corporation or any of its
affiliated companies. Amounts which are vested
benefits or which the Executive is otherwise entitled
to receive under any plan or program of the Corporation
or any of its affiliated companies shall be payable in
accordance with the terms of such plan or program.
(b) Notwithstanding the foregoing, and in
consideration of the premises contained in this
Agreement, the Executive specifically waives any rights
he may have to receive any severance pay or other
severance benefits under the Textron Executive
Severance Plan and any other severance plan, program or
agreement of the Corporation.
8. No Set-Off; Legal Fees.
The Corporation's obligation to make the payments provided
for herein and otherwise to perform its obligations
hereunder shall not be affected by any circumstances,
including without limitation any set-off, counter-claim,
recoupment, defense or other right which the Corporation may
have against the Executive or others. Unless it is finally
determined by a court of competent jurisdiction after all
available appeals that the Corporation has validly
terminated the Executive's employment for Cause, the
Corporation agrees to pay, to the full extent permitted by
law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest by the
Corporation or others of the validity or enforceability of,
or liability under, any provision of this Agreement or any
guarantee of performance thereof, plus interest on the total
unpaid amount determined to be payable hereunder, such
interest to be calculated on the basis of the prime
commercial lending rate announced by Morgan Guaranty Trust
Company in effect from time to time, for the period
commencing on the date of such contest and ending on the
date on which the Corporation shall pay such total amount
(such interest to be compounded quarterly).
9. Confidential Information.
The Executive shall hold in a fiduciary capacity for the
benefit of the Corporation all secret or confidential
information, knowledge or data relating to the Corporation
or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive
during his employment by the Corporation or any of its
affiliated companies and which shall not be public
knowledge. During and after the end of the term of
employment, the Executive shall not, without the prior
written consent of the Corporation, communicate or divulge
any such information, knowledge or data to anyone other than
the Corporation and those designated by it.
10. No Assignment.
This Agreement is personal to the Executive and without the
prior written consent of the Corporation shall not be
assignable by the Executive other than by will or the laws
of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal
representatives.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws.
The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified other
than by a written agreement executed by the parties
hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery
to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
Stephen L. Key
44 Stimson Avenue
Providence, RI 02906
If to the Corporation:
Textron Inc.
40 Westminster Street
Providence, Rhode Island 02903
or to such other address as either party shall
have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the
validity or enforceability of any other provision of
this Agreement.
(d) The Corporation may withhold from any amounts
payable under this Agreement such federal, state or
local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) This Agreement contains the entire understanding
of the parties hereto with respect to the subject
matter hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the day and year first above written.
/s/ Stephen L. Key
Stephen L. Key
TEXTRON INC.
By /s/ William F. Wayland
William F. Wayland
Executive Vice President
Administration and
Chief Human Resources Officer
ATTEST:
/s/Michael D. Cahn
Michael D. Cahn
Assistant Secretary
(SEAL)
<TABLE>
EXHIBIT 12.1
TEXTRON PARENT COMPANY BORROWING GROUP
COMPUTATION OF RATIO OF INCOME TO FIXED
CHARGES
(Unaudited)
(In millions except ratios)
YEAR
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
Fixed charges:
Interest expense (1) $ 199 $ 206 $ 236 $ 254 $ 244
Estimated interest 17 20 21 19 19
portion of rents
Total fixed charges $ 216 $ 226 $ 257 $ 273 $ 263
Income:
Income before income $ 813 $ 754 $ 616 $ 527 $ 495
taxes (2)
Fixed charges 216 226 257 273 263
Eliminate equity in
undistributed pretax
income of finance and
insurance subsidiaries (362) (347) (341) (286) (246)
Adjusted income $ 667 $ 633 $ 532 $ 514 $ 512
Ratio of income to fixed 3.09 2.80 2.07 1.88 1.95
____________________
(1) Includes interest unrelated to borrowings of $37 million in
1995, $37
million in 1994, $37 million in 1993, $36 million in 1992
and $27
million in 1991 (primarily interest accretion).
(2) Excludes the cumulative effect of changes in accounting
principles
in 1992.
</TABLE>
<TABLE>
EXHIBIT 12.1
EXHIBIT 12.2
TEXTRON INC. INCLUDING ALL MAJORITY-OWNED
SUBSIDIARIES
COMPUTATION OF RATIO OF INCOME TO FIXED
CHARGES
(Unaudited)
(In millions except ratios)
Year
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
Fixed charges:
Interest expense (1) $ 813 $ 665 $668 $ 743 $ 754
Estimated interest 40 41 43 41 39
portion of
rents
Total fixed charges $ 853 $ 706 $ 711 $ 784 $ 793
Income:
Income before income $ 813 $ 754 $ 616 $ 527 $ 495
taxes (2)
Elimination of minority
interest in pretax income
pretax income of Paul Revere (21) (22) (4) - -
Fixed charges 853 706 711 784 793
Adjusted income $ 1,645 $ 1,438 1,323 $ 1,311 $ 1,288
Ratio of income to fixed 1.93 2.04 1.86 1.67 1.62
charges
____________________
(1) Includes interest unrelated to borrowings of $37 million in
1995, $37 million in 1994, $37 million in 1993, $36 million in 1992 and
$27 million in 1991 (primarily interest accretion).
(2) Excludes the cumulative effect of changes in accounting
principles in 1992.
</TABLE>
<PAGE> 1
1995 FINANCIAL REPORT
- -------------------------------------------------------------------------------
22
Business Segment Data
23
Management's Discussion and Analysis
30
Condensed Financial Information for the
Textron Parent Company Borrowing Group
31
Report of Management
Report of Independent Auditors
32
Consolidated Financial Statements
36
Summary of Significant Accounting Policies
38
Notes to Consolidated Financial Statements
51
Quarterly Financial Information
52
Five Year Summary
<PAGE> 2
- -------------------------------------------------------------------------------
Business Segment Data
For a description of the businesses comprising each segment, see pages
53 to 55.
<TABLE>
<CAPTION>
Revenues Operating Income Operating Income Margins
------------------------------ ------------------------------ -------------------------
(In millions) 1995 1994 1993 1995 1994 1993 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Manufacturing:
Aircraft $2,419 $2,186 $1,987 $ 237 $ 194 $ 171 9.8% 8.9% 8.6%
Automotive 1,576 1,557 1,221 138 139 96 8.8 8.9 7.9
Industrial 1,421 1,395 1,224 162 142 106 11.4 10.2 8.7
Systems and Components 1,052 1,540 1,839 85 99 125 8.1 6.4 6.8
- -----------------------------------------------------------------------------------------------------------------------------------
6,468 6,678 6,271 622 574 498 9.6 8.6 7.9
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Services:
Finance 1,985 1,672 1,610 365 331 289 18.4 19.8 18.0
Paul Revere 1,520 1,331 1,193 123 131 146 8.1 9.8 12.2
- -----------------------------------------------------------------------------------------------------------------------------------
3,505 3,003 2,803 488 462 435 13.9 15.4 15.5
- -----------------------------------------------------------------------------------------------------------------------------------
$9,973 $9,681 $9,074 1,110 1,036 933 11.1 10.7 10.3
- ------------------------------------==============================-----------------------------------------------------------------
Corporate expenses
and other - net (98) (78) (85)
Interest expense - net (199) (204) (232)
- ------------------------------------------------------------------------------------------------------
Income before income taxes $ 813 $ 754 $ 616
======================================================================================================
</TABLE>
[1995 REVENUES GRAPH]
[1995 OPERATING INCOME GRAPH]
<TABLE>
<CAPTION>
Identifiable Assets Capital Expenditures Depreciation
------------------------------- ----------------------------- ------------------------
(In millions) 1995 1994 1993 1995 1994 1993 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Manufacturing:
Aircraft $ 1,739 $ 1,636 $ 1,658 $ 74 $ 78 $ 67 $ 49 $ 48 $ 46
Automotive 880 870 686 80 87 55 41 39 33
Industrial 1,250 849 585 76 70 63 45 41 33
Systems and Components 1,109 1,216 1,832 22 29 32 35 56 67
- -----------------------------------------------------------------------------------------------------------------------------------
4,978 4,571 4,761 252 264 217 170 184 179
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Services:
Finance 10,816 9,900 8,801 23 22 20 20 18 18
Paul Revere 7,046 5,909 5,377 4 8 6 7 6 5
- -----------------------------------------------------------------------------------------------------------------------------------
17,862 15,809 14,178 27 30 26 27 24 23
- -----------------------------------------------------------------------------------------------------------------------------------
Corporate 467 642 834 4 8 9 5 4 4
Eliminations (135) (97) (115) - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
$23,172 $20,925 $19,658 $283 $302 $252 $202 $212 $206
===================================================================================================================================
Notes:
(i) Income of the Systems and Components segment for 1994 includes $30
million applicable to the Lycoming Turbine Engine division, sold in that
year, the benefit of which was immaterial to Textron's net income due to
the nontax deductibility of goodwill.
(ii) Income of the Finance segment is net of interest expense.
(iii) Corporate expenses and other - net for 1994 and 1993 include pretax
charges of $9 million and $14 million, respectively, related to the early
redemption of debt.
</TABLE>
22 T E X T R O N
<PAGE> 3
- -------------------------------------------------------------------------------
Management's Discussion and Analysis
[RESULTS OF OPERATIONS GRAPH]
Textron Inc.
1995 vs. 1994
* Textron's net income in 1995 was $479 million, up from $433 million in
1994; earnings per share of $5.51 were 15% higher than the $4.80 reported
last year. Revenues increased 3% to $10.0 billion in 1995 from $9.7 billion
in 1994. Excluding the effects of the Textron Lycoming Turbine Engine and the
Homelite divisions, which were sold in 1994, revenues were up 9%.
* Operating income of Textron's six business segments aggregated $1.1 billion
in 1995, up 7% from 1994, as a 15% increase in the aggregate income of the
Aircraft, Industrial and Finance segments more than offset lower results in
the Systems and Components and Paul Revere segments. Operating income in the
Automotive segment was essentially unchanged.
* Corporate expenses and other - net increased in 1995 by $20 million due in
large part to an increase in compensation expense tied directly to changes in
the market value of Textron's common stock ($17 million). To mitigate the
impact on compensation expense of future increases in stock price, Textron
entered into a cash-settlement option program on Textron's common stock in
November 1995.
* The lower interest expense of the Textron Parent Company Borrowing Group -
$199 million in 1995 vs. $204 million in 1994 - reflected a lower level of
average borrowing, notwithstanding the incremental borrowing associated with
acquisitions in the fourth quarter, partially offset by an increased cost of
borrowing.
1994 vs. 1993
* Textron's net income in 1994 was $433 million, up from $379 million in
1993; earnings per share of $4.80 were 14% higher than the $4.21 reported for
1993. Revenues increased 7% to $9.7 billion in 1994 from $9.1 billion in
1993.
* Operating income was $1.0 billion in 1994, up 11% from 1993, as a 22%
increase in the aggregate income of the Aircraft, Automotive, Industrial, and
Finance segments more than offset lower results in the Systems and Components
and Paul Revere segments.
* Corporate expenses and other - net in 1994 were lower by $7 million than
their corresponding level in 1993, principally as a result of a lower pretax
charge related to the early redemptions of high coupon debt ($9 million in
1994 vs. $14 million in 1993).
* The lower interest expense of the Textron Parent Company Borrowing Group -
$204 million in 1994 vs. $232 million in 1993 - principally reflected a lower
level of average borrowing.
[AIRCRAFT GRAPH]
1995 vs. 1994
The Aircraft segment's revenues and income increased $233 million (11%) and
$43 million (22%), respectively.
* Bell Helicopter's revenues increased, primarily as a result of higher
international aircraft sales ($199 million) and higher revenues under the
V-22 engineering and manufacturing development contract ($97 million),
partially offset by lower sales to foreign military customers and to the U.S.
Government ($95 million). Bell's income increased primarily as a result of
the higher revenues.
* Cessna's revenues and income increased primarily as a result of higher
sales of utility turboprop aircraft. Increased product development expenses,
principally related to the Bravo and Excel Citation aircraft ($32 million),
were partially offset by reduced JPATS bid and proposal expenses and product
support costs ($23 million).
1994 vs. 1993
The Aircraft segment's revenues and income increases of $199 million (10%)
and $23 million (13%), respectively, related principally to Bell Helicopter.
* Bell Helicopter's revenues increased, primarily as a result of higher
revenues under the V-22 and other military contracts ($233 million) and
higher international aircraft sales ($54 million), partially offset by lower
sales of spare parts, both military and commercial ($40 million). Bell's
income increased as a result of the higher revenues and improved
manufacturing efficiencies, partially offset by increased product development
expenses related to three new helicopter models ($13 million) and lower
margins on commercial spares ($13 million).
T E X T R O N 23
<PAGE> 4
- -------------------------------------------------------------------------------
* Cessna's revenues and income increased primarily as a result of improved
margins attributable to lower LIFO expense and a shift in sales mix to
domestic utility turboprop aircraft ($12 million). Lower product development
expenses related to the Citation X aircraft and lower expenses for the JPATS
competition ($18 million) offset higher product support costs ($10 million)
resulting from an adjustment to the warranty reserve for certain aircraft
models. 1993 benefited from an $18 million insurance settlement.
[AUTOMOTIVE GRAPH]
1995 vs. 1994
The Automotive segment's revenues increased $19 million (1%) despite a
reduction in North American automotive production, due to higher production
of models with Textron content. Income decreased slightly, due to start-up
costs related to the launch of new products and facilities.
1994 vs. 1993
The Automotive segment's revenues and income increased $336 million (28%) and
$43 million (45%), respectively, as a result of (a) the inclusion for the
full year of a business acquired in May 1993 (resulting in higher revenues of
$208 million in 1994), (b) higher automotive production, and (c) lower
warranty provisions ($6 million). 1993 included a provision for the
consolidation of certain manufacturing operations ($7 million).
[INDUSTRIAL GRAPH]
1995 vs. 1994
The Industrial segment's revenues increased $26 million (2%) and income
increased $20 million (14%). The increases were due principally to higher
sales in the fastening systems business ($166 million), reflecting Avdel's
results for the full year in 1995 compared with nine months in 1994, and the
acquisition of Elco Industries in October 1995. In addition, sales were
higher and performance was better in the turf care equipment and contractor
tool businesses. Partially offsetting these increases was the divestiture of
the Homelite division in August 1994 ($189 million of sales and $14 million
of income). Excluding the impact of Homelite, revenues and income increased
18% and 26%, respectively.
1994 vs. 1993
The Industrial segment's revenues increased $171 million (14%) and income
increased $36 million (34%). The increases were due principally to higher
fastening systems sales including the sales of Avdel, the results of which
have been included in Textron's consolidated results beginning in the second
quarter of 1994 ($192 million). These favorable factors were partially offset
by (a) lower income in the turf care equipment business, resulting from the
implementation of a change in distribution, which lowered sales, and (b)
higher costs. The sale of Homelite in August 1994 resulted in a gain of $8
million. 1993 included a provision for the consolidation of certain
manufacturing operations ($9 million).
[SYSTEMS AND COMPONENTS GRAPH]
1995 vs. 1994
The Systems and Components segment's revenues decreased $488 million (32%)
and income decreased $14 million (14%). The decrease in revenues was due to
the divestiture of the Lycoming Turbine Engine division ($379 million) and to
reduced shipments on certain U.S. Government and commercial aerospace
contracts. The income decrease was also due to the October 1994 divestiture
of Lycoming Turbine Engine ($30 million, the after-tax effect of which was
immaterial to net income due to the nontax deductibility of goodwill). These
unfavorable factors were partially offset by provisions in 1994 for legal
matters and the consolidation of certain manufacturing operations ($25
million).
Textron's Systems and Components segment will be impacted in 1996 by a
further decline in revenues, due primarily to lower U.S. Government spending
for the defense products of this segment and the expected
24 T E X T R O N
<PAGE> 5
- -------------------------------------------------------------------------------
continued weakness in the commercial aerospace industry, including the effects
of certain customers consolidating their operations.
In response to this adverse business environment, Textron continues to
leverage its defense technology for commercial applications, reduce costs in
line with the lower business base, and pursue business opportunities that may
arise, including joint ventures and divestitures.
1994 vs. 1993
Revenues and income in 1994 were $1.161 billion and $94 million,
respectively, compared to $1.224 billion and $105 million, respectively, for
1993 excluding Lycoming Turbine Engine and provisions ($25 million in 1994
and $31 million in 1993) for legal matters and the consolidation of certain
manufacturing operations. The decreases in revenues ($63 million) and income
($11 million) were due primarily to further weakness in the defense and
commercial aerospace markets.
[FINANCE GRAPH]
1995 vs. 1994
The Finance segment's revenues increased $313 million (19%), while income
increased $34 million (10%).
* Avco Financial Services' (AFS) revenues increased $276 million due
primarily to (a) a higher level of finance receivables outstanding (average
receivables were $6.867 billion in 1995 vs. $5.696 billion in 1994), (b) an
increase in earned insurance premiums ($62 million), and (c) an increase in
investment income ($11 million), due primarily to higher yields (7.78% in
1995 vs. 7.06% in 1994) and a higher level of invested assets. These higher
revenues were partially offset by a decrease in yields on finance receivables
(18.20% in 1995 vs. 18.39% in 1994), due primarily to an increase in the
level of retail installment contracts outstanding. AFS' income increased $28
million, due primarily to those factors and a decrease in the ratio of
operating expenses to revenues (32.25% in 1995 vs. 33.67% in 1994). This
favorable impact was partially offset by an increase in the average cost of
borrowed funds (7.32% in 1995 vs. 6.63% in 1994) and an increase in the ratio
of net credit losses to average finance receivables (2.10% in 1995 vs. 1.99%
in 1994). The increase in delinquencies and net credit losses, which began
during the latter part of 1995, was due to economic slowdowns in the U.S. and
other countries in which AFS operates. The consumer debt load has continued
to increase faster than the consumers' ability to pay. AFS has tightened its
underwriting standards and unless the economies in the countries in which it
operates decline further, AFS believes these trends will turn around by
mid-1996.
* Textron Financial Corporation's (TFC) income increased $6 million on higher
revenues of $37 million primarily due to (a) higher yields on finance
receivables (10.34% in 1995 vs. 9.45% in 1994), (b) a higher level of finance
receivables outstanding (average receivables were $2.839 billion in 1995 vs.
$2.641 billion in 1994), and (c) a lower provision for loan losses ($6
million), reflecting an improvement in the equipment portfolio and
stabilization of nonperforming real estate assets. These factors were
partially offset by increased interest expense.
1994 vs. 1993
The Finance segment's revenues increased $62 million (4%), while income
increased $42 million (15%).
* AFS' revenues increased $42 million, due primarily to a higher level of
finance receivables outstanding (average receivables were $5.696 billion in
1994 vs. $5.208 billion in 1993), partially offset by a decline in yields on
finance receivables (18.39% in 1994 vs. 19.10% in 1993). Its income increased
$33 million, due to (a) the higher level of finance receivables outstanding,
(b) a decrease in the average cost of borrowed funds (6.63% in 1994 vs. 6.97%
in 1993), (c) a decrease in insurance losses in both finance-related and
nonfinance-related insurance operations, and (d) a decrease in policy
acquisition costs ($6 million), due to a reduction in nonfinance-related
insurance premiums earned. These favorable factors were partially offset by
(a) the decline in yields and (b) an increase in loan loss provisions ($15
million), due to growth in finance receivables outstanding, offset in part by
an improvement in the ratio of net credit losses to average finance
receivables. The ratio decreased to 1.99% in 1994 from 2.14% in 1993.
* TFC's income increased $9 million on higher revenues of $20 million, due
principally to (a) a higher level of finance receivables outstanding (average
receivables were $2.641 billion in 1994 vs. $2.435 billion in 1993), (b)
higher leveraged lease income ($4 million), primarily related to the higher
sales of residual appreciation rights and the benefit of a nonrecourse debt
refinancing, and (c) a decrease in loan loss provisions ($7 million). These
factors were partially offset by increased interest expense.
T E X T R O N 25
<PAGE> 6
- -------------------------------------------------------------------------------
[PAUL REVERE GRAPH]
1995 vs. 1994
Paul Revere's revenues increased $189 million (14%) due to increased premiums
in all lines of business, particularly the individual and group disability
lines ($98 million), and to higher net investment income ($76 million),
including net realized investment gains. Its income decreased $8 million
(6%), primarily as a result of a higher individual disability insurance
benefit ratio and reserve strengthening related to the excess risk
reinsurance line of business ($59 million), primarily as a result of a loss
recognition study. Effective in March 1995, new business in the excess risk
reinsurance line is no longer being written. The decreases in income were
partially offset by higher net realized investment gains ($77 million in 1995
vs. $23 million in 1994), an improved benefit ratio in the group disability
insurance line of business (76.4% in 1995 vs. 77.1% in 1994), and improved
expense ratios across all lines of business.
The higher benefit ratio in individual disability insurance - 85.3%
excluding the impact of the reserve strengthening in the excess risk
reinsurance line of business, compared with 83.8% in 1994 - was the result of
adverse claims experience in the excess risk reinsurance line and the block of
policies issued between 1985 and 1989, especially in Florida and California,
partially offset by the favorable impact of a reinsurance transaction in the
third quarter of 1995. In addition, policies issued to physicians have
performed below expectations. During 1995, Paul Revere experienced gradual
improvement in the individual disability insurance benefit ratio and expects
this gradual improvement to continue throughout 1996, as it continues to
introduce new products, initiate pricing and underwriting adjustments, and
emphasize improved claims management.
Establishment of insurance reserves requires making various actuarial
assumptions. While actual experience could differ from the assumed actuarial
experience underlying its policy and claim reserves, Textron believes that
these reserves have been determined on reasonable bases and are adequate. The
continued decline in market interest rates and/or the absence of morbidity
improvements, could result in adjustments to reserve amounts and deferred
costs. Paul Revere has undertaken underwriting and claims management measures
mentioned above to mitigate the impact of these potential occurrences.
1994 vs. 1993
Paul Revere's revenues increased $138 million (12%), due to continued growth
in its individual disability insurance line ($83 million), increased premium
volume in group insurance ($27 million) and higher net investment income ($26
million). Its income decreased $15 million (10%), primarily attributable to a
significantly higher individual disability insurance benefit ratio (83.8% in
1994 vs. 72.9% in 1993). Positive earnings factors included higher net
realized investment gains ($23 million in 1994 vs. $15 million in 1993) and
increased group disability and individual life insurance income.
--------------------
Liquidity & Capital Resources
Financing for Textron is conducted through two separate borrowing groups: the
Textron Parent Company Borrowing Group (consisting of all entities of Textron
other than its finance and insurance subsidiaries) and Textron's finance and
insurance subsidiaries.
Parent Company Borrowing Group
Management believes that the Textron Parent Company Borrowing Group will
continue to have adequate access to credit markets and that its credit
facilities and cash flows from operations--including dividends received from
Textron's finance and insurance operations--will continue to be more than
sufficient to meet its operating needs and to finance growth. Information
about the cash flows of this group is set forth in its statement of cash
flows on page 30.
* Cash flows from operating activities in 1995 of $536 million were
approximately the same as they were in 1994. The effect of increased income
and reductions of the cash value of company-owned life insurance were offset
by increases in receivables and inventory, due principally to increased
business, and reductions of accrued and other liabilities.
* The Group's debt increased by $192 million in 1995, as cash used for
capital expenditures, acquisitions, purchases of 1.7 million shares of
Textron common stock under its stock repurchase program, and payments of
dividends exceeded the $536 million of cash provided by operations.
Notwithstanding the increase in debt, Textron's ratio of debt to total
capital decreased to 34% at December 30, 1995, from 35% at December 31, 1994.
26 T E X T R O N
<PAGE> 7
- -------------------------------------------------------------------------------
* Cash flows from operating activities in 1994 of $538 million were down
from the 1993 level. The decrease was due to higher receivables (due in large
part to changed payment terms with a major customer and higher sales volume)
and lower reductions in inventories in 1994 compared to those in 1993. These
factors were partially offset by increased income and increased customer
deposits in 1994.
* The Group's debt decreased by $443 million in 1994, as operating cash
flows and cash proceeds from divestitures exceeded capital expenditures,
payments of dividends, and purchases of 3.3 million shares of Textron common
stock.
During 1994, Textron redeemed an aggregate principal amount of $121
million of its 9-1/4% fixed rate debt, resulting in a pretax charge to income of
$9 million.
[CAPITAL EXPENDITURES GRAPH]
* Capital expenditures: See the table on page 22 for capital expenditures by
business segment for 1995, 1994, and 1993. Such expenditures reflect
Textron's growth strategy in its Aircraft, Automotive, and Industrial
segments. Aggregate capital expenditures for 1996 are expected to more
closely approximate the higher level of spending in 1994, as Textron invests
in (a) new Citation aircraft models and single-engine aircraft and (b)
increased capacity and improved manufacturing productivity in the Industrial
segment. Spending is expected to be lower in 1996 in the Automotive segment
following significant investments in 1994 and 1995.
* Acquisitions: In 1995, Textron acquired Elco Industries at an aggregate
cost of $230 million. In 1993, Textron acquired the plastics operations of
the Acustar division of Chrysler Corporation at a cost of $139 million.
* Dispositions: In 1994, Textron sold its Homelite and Lycoming Turbine
Engine divisions. Cash proceeds aggregated $495 million.
* Paul Revere IPO: In 1993, Textron sold 16.7% of the shares of Paul Revere,
in a public offering, for $175 million. Textron contributed $100 million to
the capital of Paul Revere just prior to the sale.
* Debt and credit facilities: Textron had a $1.5 billion credit facility
with 36 banks at December 30, 1995. The portion of the credit facility not
used or reserved as support for commercial paper or bank borrowings was $681
million at that date.
Textron had $211 million available at December 30, 1995 for the issuance
of unsecured debt securities under its shelf registration statement with the
Securities and Exchange Commission. On February 1, 1996, a new shelf
registration statement became effective, covering an additional aggregate
amount of $800 million of (a) debt issuable by Textron and (b) preferred
securities issuable by entities formed by Textron as to which Textron would
provide certain guarantees. On February 9, 1996, a trust sponsored by Textron
issued $500 million of such preferred securities, the proceeds of which were
invested by the trust in Textron's newly issued 7.92% Junior Subordinated
Deferrable Interest Debentures due 2045. The proceeds from the issuance of
the debentures were initially used by Textron for the repayment of long-term
borrowings and, ultimately, will be used for general corporate purposes.
* Interest rate exchange agreements: The difference between the variable
rate the Group received and the fixed rate it paid on interest rate exchange
agreements increased its reported interest expense by $14 million in 1995,
$27 million in 1994, and $33 million in 1993.
Finance and Insurance Subsidiaries
This group includes AFS, TFC, and Paul Revere. Information about the cash
flows of this group is set forth in its statement of cash flows included in
Note 17 to the consolidated financial statements.
* Dividends: 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. The finance and insurance
subsidiaries paid dividends to the Textron Parent Company Borrowing Group of
$126 million, $115 million and $94 million in 1995, 1994 and 1993,
respectively.
* Capital resources: AFS and TFC each utilize a broad base of financial
sources for their respective liquidity and capital requirements. Cash is
provided from both operations and several different sources of borrowings,
including unsecured borrowings under bank lines of credit, the issuance of
commercial paper and short-term bank debt, and sales of medium- and long-term
debt in the U.S. and foreign financial markets. During 1995, the net proceeds
from medium- and long-term financing sources, including the issuances
described below, totaled $1.9 billion. Debt increased by $693 million in
1995, due principally to receivable growth and debt assumed upon the
acquisition of HFC of Australia, Ltd.
T E X T R O N 27
<PAGE> 8
- -------------------------------------------------------------------------------
* Debt and credit facilities: During 1995, AFS issued $1.4 billion of
unsecured debt securities, including $1.1 billion under its shelf
registration statements. At December 31, 1995, AFS had $1.3 billion available
for unsecured debt securities under its shelf registration statement with the
Securities and Exchange Commission and $417 million available for similar
securities under its shelf registration statements with the Canadian
provincial security exchanges.
In 1994, TFC established a medium-term note facility for $500 million.
TFC had $367 million available under this facility at December 31, 1995.
By utilizing medium- and long-term fixed rate financing, as well as
interest rate exchange agreements, Textron's finance subsidiaries effectively
had a combined ratio of variable rate debt to total debt of 43% at December 31,
1995.
* Acquisition: In January 1995, AFS acquired HFC of Australia, Ltd., and
through this acquisition added approximately $436 million of finance
receivables to its portfolio.
* Interest rate exchange agreements: The difference between the variable
rate the finance subsidiaries received and the fixed rate they paid on
interest rate exchange agreements increased their reported interest expense
by $13 million in 1995, $21 million in 1994, and $47 million in 1993.
* Investment in real estate: Textron's finance and insurance subsidiaries
have substantial amounts of investments and finance receivables backed up or
secured by real estate.
AFS had residential real estate loans outstanding of $2.5 billion at
December 31, 1995, which were secured primarily by first and second mortgages
on single family homes, and averaged $27 thousand in outstanding principal
balance. Residential real estate loans are geographically dispersed and loan
amounts are limited to a maximum of 85% of the property's appraised market
value, although most loans are made at significantly lower loan to value
ratios.
TFC had real estate loans and leveraged leases of real estate aggregating
$426 million and $188 million, respectively, at December 31, 1995. The
commercial real estate portfolio of $196 million, consisting principally of
first mortgages on income producing properties, is diversified both
geographically and by type of property financed. Nonearning commercial real
estate loans were $72 million at December 31, 1995 ($76 million at December
31, 1994).
Insurance: At December 31, 1995, Textron's insurance subsidiaries held
$311 million of first mortgages on real estate. The real estate portfolio is
well diversified geographically and by type of property financed.
Foreclosed real estate: At December 31, 1995, real estate classified in
other assets or other investments aggregated $77 million ($68 million at
December 31, 1994).
Reserves for nonperforming real estate: While realization of nonperforming
real estate assets is subject to uncertainties including prevailing economic
conditions and the status of the real estate market, Textron believes that
its reserves have been determined on reasonable bases and are adequate.
Subsequent evaluations of nonperforming assets, in light of factors then
prevailing, including economic conditions, may require increases in the
reserves for such assets.
Mortgage-backed securities: Textron's insurance subsidiaries' investments
included mortgage-backed securities with an amortized cost of $601 million at
December 31, 1995, ($810 million at December 31, 1994), a substantial portion
of which is guaranteed by the U.S. Government or U.S. Government agencies.
Future investment income from mortgage-backed securities may be affected by
the timing of principal payments and the yields on reinvestment alternatives
available at the time of such payments.
* Other investments and finance receivables: Textron's insurance
subsidiaries also have significant investments in other debt securities. The
predominant portion of these investments is in high quality, investment grade
assets. Textron's investment strategies place an emphasis on matching
investment maturities with the timing of amounts estimated to be payable
under insurance contracts.
Textron's finance subsidiaries also have a diversified portfolio of other
consumer and commercial receivables.
For further information about investments and finance receivables, see
Note 1 and Note 2 to the consolidated financial statements.
---------------------
28 T E X T R O N
<PAGE> 9
- -------------------------------------------------------------------------------
Other Matters
* Environmental: Textron is involved in a number of remedial actions under
various federal and state laws and regulations relating to the environment
which impose liability on companies to clean up, or contribute to the cost of
cleaning up, sites on which their hazardous wastes or materials were disposed
or released. Expenditures to evaluate and remediate contaminated sites
approximated $15 million, $14 million and $18 million in 1995, 1994, and
1993, respectively. Textron currently projects that expenditures for
remediation will range between $10 million and $20 million for each of the
years 1996 and 1997. (See the Summary of Significant Accounting Policies and
Note 15 to the consolidated financial statements for further information
about environmental matters.)
Based upon the information currently available, Textron believes it has
made adequate provision for costs associated with known remediation efforts.
Despite the uncertainty concerning the overall costs of additional remedial
actions that might be identified in the future, it is not currently
anticipated that such costs will have a material adverse effect on Textron's
liquidity, net income or financial condition.
* Interest rate management: As part of managing its interest rate risk,
Textron utilizes interest rate exchange agreements. The objective is not to
speculate for profit, but, rather, is to convert variable rate debt into
fixed rate debt, with respect to specific designated borrowings. These
agreements do not involve a high degree of complexity or risk. For further
information about these agreements and the debt and credit facilities of the
Textron Parent Company Borrowing Group and the finance and insurance
subsidiaries, see Note 7 to the consolidated financial statements.
* Foreign currency exchange agreements: Textron's exposure to foreign
exchange rate risk is not significant due to the diversification of its
operations among various divisions and geographic locations, there being no
one significant foreign operation and no significant exposure to highly
inflationary currencies. Textron enters into forward exchange contracts to
hedge the risk associated with currency fluctuations on certain firm sales
and purchase commitments denominated in foreign currencies. For further
information about these contracts see the Summary of Significant Accounting
Policies in the consolidated financial statements.
<TABLE>
- ------------------------------------------------------------------
Backlog
<CAPTION>
(Unaudited) December 30, December 31,
(In billions) 1995 1994
- ------------------------------------------------------------------
<S> <C> <C>
U.S. Government:
Aircraft $1.2 $1.6
Systems and Components .5 .7
- ------------------------------------------------------------------
1.7 2.3
- ------------------------------------------------------------------
Commercial:
Aircraft 2.3 2.2
Industrial .3 .3
Systems and Components .5 .5
- ------------------------------------------------------------------
3.1 3.0
- ------------------------------------------------------------------
$4.8 $5.3
==================================================================
Note:
The decrease in the Aircraft segment's U.S. Government backlog was
due primarily to revenues recorded in 1995 under the V-22 program.
</TABLE>
T E X T R O N 29
<PAGE> 10
- -------------------------------------------------------------------------------
Condensed Financial Information for the Textron Parent Company Borrowing Group
<TABLE>
Statement of Income
<CAPTION>
For each of the three years in the period ended December 30, 1995
(In millions) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $6,468 $6,680 $6,275
- ------------------------------------------------------------------------------------------------------------------
Costs and expenses
Cost of sales 5,294 5,514 5,210
Selling and administrative 650 668 648
Interest 199 206 236
- ------------------------------------------------------------------------------------------------------------------
Total costs and expenses 6,143 6,388 6,094
- ------------------------------------------------------------------------------------------------------------------
325 292 181
Pretax income of finance and insurance subsidiaries 488 462 435
- ------------------------------------------------------------------------------------------------------------------
Income before income taxes 813 754 616
Income taxes (321) (308) (234)
Elimination of minority interest in net income of Paul Revere (13) (13) (3)
- ------------------------------------------------------------------------------------------------------------------
Net income $ 479 $ 433 $ 379
==================================================================================================================
</TABLE>
<TABLE>
Balance Sheet
<CAPTION>
December 30, December 31,
(In millions) 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash $ 56 $ 20
Receivables - net 777 702
Inventories 1,284 1,211
Investments in finance and insurance subsidiaries 2,636 2,246
Property, plant and equipment - net 1,297 1,146
Goodwill, less accumulated amortization of $233 and $194 1,344 1,231
Other (including net prepaid income taxes) 1,177 1,262
- --------------------------------------------------------------------------------------------------
Total assets $8,571 $7,818
==================================================================================================
Liabilities and shareholders' equity
Accounts payable and accrued liabilities (including income taxes) $3,385 $3,354
Debt 1,774 1,582
Shareholders' equity 3,412 2,882
- --------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $8,571 $7,818
==================================================================================================
</TABLE>
<TABLE>
Statement of Cash Flows
For each of the three years in the period ended December 30, 1995
<CAPTION>
(In millions) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 479 $ 433 $ 379
Adjustments to reconcile net income to net cash provided
by operating activities:
Undistributed earnings of finance and insurance subsidiaries (160) (155) (165)
Depreciation and amortization 221 238 229
Other - net (4) 22 141
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 536 538 584
Net cash provided (used) by investing activities (437) 224 (168)
Net cash used by financing activities (63) (754) (432)
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 36 8 (16)
Cash at beginning of year 20 12 28
- ------------------------------------------------------------------------------------------------------------------
Cash at end of year $ 56 $ 20 $ 12
==================================================================================================================
</TABLE>
30 T E X T R O N
<PAGE> 11
- -------------------------------------------------------------------------------
Report of Management
The consolidated financial statements of Textron Inc. have been prepared by
management and have been audited by Textron's independent auditors, Ernst &
Young LLP, whose report appears below. Management is responsible for the
consolidated financial statements, which have been prepared in conformity
with generally accepted accounting principles and include amounts based on
management's best estimates and judgments.
Management is also responsible for maintaining internal control systems
designed to provide reasonable assurance, at appropriate cost, that assets
are safeguarded and that transactions are executed and recorded in accordance
with established policies and procedures. Textron's systems are under
continuing review and are supported by, among other things, business conduct
and other written guidelines, an internal audit function and the selection
and training of qualified personnel.
The Board of Directors, through its Audit Committee, oversees management's
financial reporting responsibilities. The Audit Committee, comprised of four
outside directors, meets regularly with the independent auditors,
representatives of management and the internal auditors to discuss and make
inquiries into their activities. Both the independent auditors and the
internal auditors have free access to the Audit Committee, with and without
management representatives in attendance.
/s/James F. Hardymon
James F. Hardymon
Chairman and Chief Executive Officer
/s/Stephen L. Key
Stephen L. Key
Executive Vice President and Chief Financial Officer
January 25, 1996
- -------------------------------------------------------------------------------
Report of Independent Auditors
To the Board of Directors and Shareholders
Textron Inc.
We have audited the accompanying consolidated balance sheet of Textron Inc.
as of December 30, 1995 and December 31, 1994, and the related consolidated
statements of income, cash flows and changes in shareholders' equity for each
of the three years in the period ended December 30, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Textron Inc.
at December 30, 1995 and December 31, 1994 and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 30, 1995 in conformity with generally accepted accounting
principles.
/s/Ernst & Young LLP
New York, New York
January 25, 1996
T E X T R O N 31
<PAGE> 12
- -------------------------------------------------------------------------------
Consolidated Statement of Income
<TABLE>
<CAPTION>
For each of the three years in the period ended December 30, 1995
(In millions except per share amounts) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues
Sales $6,468 $6,678 $6,271
Interest, discount and service charges 1,565 1,333 1,260
Insurance premiums 1,412 1,233 1,137
Investment income (including net realized investment gains) 528 439 410
- ------------------------------------------------------------------------------------------------------------------
Total revenues 9,973 9,683 9,078
- ------------------------------------------------------------------------------------------------------------------
Costs and expenses
Cost of sales 5,294 5,514 5,210
Selling and administrative 1,552 1,489 1,438
Interest 813 665 668
Provision for losses on collection of finance receivables, less recoveries 169 162 153
Insurance benefits and increase in policy liabilities 1,195 992 850
Amortization of insurance policy acquisition costs 137 107 143
- ------------------------------------------------------------------------------------------------------------------
Total costs and expenses 9,160 8,929 8,462
- ------------------------------------------------------------------------------------------------------------------
Income before income taxes 813 754 616
Income taxes (321) (308) (234)
Elimination of minority interest in net income of Paul Revere (13) (13) (3)
- ------------------------------------------------------------------------------------------------------------------
Net income $ 479 $ 433 $ 379
==================================================================================================================
Net income per common share $ 5.51 $ 4.80 $ 4.21
==================================================================================================================
See summary of significant accounting policies and notes to consolidated financial statements.
</TABLE>
32 T E X T R O N
<PAGE> 13
- -------------------------------------------------------------------------------
Consolidated Balance Sheet
<TABLE>
<CAPTION>
December 30, December 31,
(Dollars in millions) 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash $ 99 $ 49
Investments 5,926 5,294
Receivables - net:
Finance 9,362 8,583
Commercial and U.S. Government 777 702
- ---------------------------------------------------------------------------------------------------
10,139 9,285
Inventories 1,284 1,211
Property, plant and equipment, less accumulated depreciation of
$1,652 and $1,450 1,408 1,253
Insurance policy acquisition costs 897 911
Goodwill, less accumulated amortization of $438 and $381 1,607 1,512
Other (including net prepaid income taxes) 1,812 1,410
- ---------------------------------------------------------------------------------------------------
Total assets $23,172 $20,925
===================================================================================================
Liabilities and shareholders' equity
Liabilities
Accounts payable $ 684 $ 619
Accrued postretirement benefits other than pensions 938 951
Other accrued liabilities (including income taxes) 2,531 2,424
Insurance reserves and claims 5,358 4,685
Debt:
Textron Parent Company Borrowing Group 1,774 1,582
Finance and insurance subsidiaries 8,475 7,782
- ---------------------------------------------------------------------------------------------------
10,249 9,364
- ---------------------------------------------------------------------------------------------------
Total liabilities 19,760 18,043
===================================================================================================
Shareholders' equity
Capital stock:
Preferred stock (15,000,000 shares authorized):
$2.08 Cumulative Convertible Preferred Stock, Series A
(liquidation value - $16.8) 8 9
$1.40 Convertible Preferred Dividend Stock, Series B
(preferred only as to dividends) 7 7
Common stock, 12.5 cents par value (250,000,000 shares authorized;
93,462,000 and 92,284,000 shares issued) 12 12
Capital surplus 750 702
Retained earnings 2,864 2,518
Other 129 (108)
- ---------------------------------------------------------------------------------------------------
3,770 3,140
Less cost of treasury shares 358 258
- ---------------------------------------------------------------------------------------------------
Total shareholders' equity 3,412 2,882
- ---------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $23,172 $20,925
===================================================================================================
See summary of significant accounting policies and notes to consolidated financial statements.
</TABLE>
T E X T R O N 33
<PAGE> 14
- -------------------------------------------------------------------------------
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
For each of the three years in the period ended December 30, 1995
(In millions) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 479 $ 433 $ 379
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 415 398 424
Provision for losses on receivables 208 200 195
Increase in insurance policy liabilities 590 417 342
Deferred income taxes 92 92 28
Gains on sales of investments (80) (26) (19)
Changes in assets and liabilities excluding those related to
acquisitions and divestitures:
Increase in commercial and U.S. Government receivables (40) (163) (27)
Decrease (increase) in inventories (28) 64 176
Additions to insurance policy acquisition costs (265) (232) (235)
Decrease (increase) in other assets 9 (58) (80)
Increase in accounts payable 53 34 108
Increase (decrease) in accrued liabilities (232) 92 (11)
Other - net 83 19 21
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,284 1,270 1,301
- ------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of investments (1,766) (1,954) (1,744)
Proceeds from disposition of investments 1,094 829 420
Maturities and calls of investments 223 545 768
Finance receivables:
Originated or purchased (6,237) (6,020) (5,011)
Repaid or sold 5,695 4,803 4,253
Cash used in acquisitions (252) (9) (139)
Net proceeds from sales of businesses and minority interest in subsidiary - 492 175
Capital expenditures (283) (302) (252)
Other investing activities - net 26 2 27
- ------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (1,500) (1,614) (1,503)
- ------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase (decrease) in short-term debt (253) 449 485
Proceeds from issuance of long-term debt 3,048 2,099 1,669
Principal payments on long-term debt (2,395) (2,072) (1,954)
Interest-sensitive insurance products, net 57 169 88
Proceeds from exercise of stock options 42 12 19
Purchases of Textron common stock (100) (166) -
Dividends paid (133) (124) (110)
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 266 367 197
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 50 23 (5)
Cash at beginning of year 49 26 31
- ------------------------------------------------------------------------------------------------------------------
Cash at end of year $ 99 $ 49 $ 26
==================================================================================================================
Supplemental Information:
Cash paid during the year for:
Interest $ 770 $ 631 $ 645
Income taxes 245 224 189
Non-cash transactions:
Liabilities assumed for acquisitions 562 - 58
- ------------------------------------------------------------------------------------------------------------------
See summary of significant accounting policies and notes to consolidated financial statements.
</TABLE>
34 T E X T R O N
<PAGE> 15
- -------------------------------------------------------------------------------
Consolidated Statement of Changes in Shareholders' Equity
<TABLE>
<CAPTION>
Shares outstanding<F*> Dollars
(In thousands) (In millions)
For each of the three years in the ------------------------------- ------------------------------
period ended December 30, 1995 1995 1994 1993 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$2.08 Preferred stock
Beginning balance 297 321 377 $ 9 $ 9 $ 11
Conversion to common stock (30) (24) (56) (1) - (2)
- ------------------------------------------------------------------------------------------------------------------------
Ending balance 267 297 321 $ 8 $ 9 $ 9
========================================================================================================================
$1.40 Preferred stock
Beginning balance 126 138 153 $ 7 $ 7 $ 8
Conversion to common stock (8) (12) (15) - - (1)
- ------------------------------------------------------------------------------------------------------------------------
Ending balance 118 126 138 $ 7 $ 7 $ 7
========================================================================================================================
Common stock
Beginning balance 85,497 88,413 87,563 $ 12 $ 12 $ 11
Purchases (1,734) (3,346) - - - -
Conversion of preferred stock to
common stock 81 75 151 - - 1
Exercise of stock options 1,091 349 695 - - -
Other issuances of common stock - 6 4 - - -
- ------------------------------------------------------------------------------------------------------------------------
Ending balance 84,935 85,497 88,413 $ 12 $ 12 $ 12
========================================================================================================================
<S> <C> <C> <C>
Capital surplus
Beginning balance $ 702 $ 687 $ 661
Conversion of preferred stock to common stock 1 1 1
Exercise of stock options 47 14 25
- ------------------------------------------------------------------------------------------------------------------------
Ending balance $ 750 $ 702 $ 687
========================================================================================================================
Retained earnings
Beginning balance $2,518 $2,209 $1,940
Net income 479 433 379
Dividends declared:
Preferred stock (1) (1) (1)
Common stock (per share: $1.56 in 1995; $1.40 in 1994 and $1.24 in 1993) (132) (123) (109)
- ------------------------------------------------------------------------------------------------------------------------
Ending balance $2,864 $2,518 $2,209
========================================================================================================================
Treasury stock
Beginning balance $ 258 $ 92 $ 91
Exercise of stock options - - 1
Purchases of common stock 100 166 -
- ------------------------------------------------------------------------------------------------------------------------
Ending balance $ 358 $ 258 $ 92
========================================================================================================================
Other
Beginning balance $ (108) $ (52) $ (52)
Currency translation adjustment 5 1 (23)
Securities valuation adjustment 216<F**> (71) 11
Pension liability adjustment 3 - (3)
Shares allocated to ESOP participants' accounts 13 14 15
- ------------------------------------------------------------------------------------------------------------------------
Ending balance $ 129 $ (108) $ (52)
========================================================================================================================
<FN>
<F*>Shares issued at the end of 1995, 1994, 1993 and 1992 were as follows (in thousands): $2.08 Preferred - 336; 366;
390 and 446 shares, respectively; $1.40 Preferred - 604; 613; 625 and 640 shares, respectively; Common - 93,462;
92,284; 91,859 and 91,007 shares, respectively.
<F**>Includes net unrealized gains relating to the transfer of all Textron's debt securities from the held to maturity
category to the available for sale category of its investment portfolio ($133 million) (see Note 2 for further
information about investments), partially offset by an adjustment to deferred policy acquisition costs ($73
million).
See summary of significant accounting policies and notes to consolidated financial statements.
</TABLE>
T E X T R O N 35
<PAGE> 16
- -------------------------------------------------------------------------------
Summary of Significant Accounting Policies
Principles of consolidation
The consolidated financial statements include the accounts of Textron and all
of its majority- and wholly-owned subsidiaries. All significant intercompany
transactions are eliminated.
Textron consists of two borrowing groups - the Textron Parent Company
Borrowing Group (comprised of all entities of Textron other than its finance
and insurance subsidiaries) and Textron's finance and insurance subsidiaries.
Separate financial information is presented on page 30 for the Textron
Parent Company Borrowing Group and in Note 17 on page 50 for the finance
and insurance subsidiaries.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in those statements and
accompanying notes. Actual results could differ from such estimates.
Finance receivables
Interest income is recognized in revenues using the interest method. Accrual
of interest income is suspended for accounts which are contractually delinquent
by more than three months (commercial) or three payments (consumer). Accrual of
interest on commercial loans is resumed, and suspended interest income is
recognized, when loans become contractually current, whereas subsequent
interest income on consumer loans is recognized when collected. Fees received
and direct loan origination costs are deferred and amortized to revenues over
the contractual lives of the respective loans using the interest method.
Finance receivables are written off when they are deemed uncollectible.
Commercial loans are written down to the fair value of the related collateral
(less estimated costs to sell) when the collateral is repossessed or when no
payment has been received for six months, unless management deems the loans
collectible. Foreclosed real estate loans are transferred from finance
receivables to other assets at the lower of the fair value of the related
real estate (less estimated costs to sell) or the outstanding loan balance.
Provisions for losses on finance receivables are charged to income in
amounts sufficient to maintain the allowance at a level considered adequate to
cover the losses in the existing receivable portfolio.
Insurance operations
Recognition of revenues and expenses
Premiums from individual disability insurance are recognized in revenues when
due. Benefits and expenses relating to individual disability insurance are
recognized over the life of the contracts through the establishment of
reserves for future policy benefits and the amortization of deferred policy
acquisition costs. For investment products, revenues consist of policy and
surrender charges assessed during the year. Unearned insurance premiums are
deferred and subsequently recognized in revenues over the lives of the
policies.
Deferred policy acquisition costs
Costs which vary with and are related primarily to the production of new
business, are deferred to the extent they are deemed recoverable from future
profits. For disability insurance, these costs are amortized in proportion to
premiums over the estimated lives of the policies. For investment products,
these costs are amortized in proportion to estimated profits.
Insurance reserves and claims
Policy reserves represent the portion of premiums received, accumulated with
interest, to provide for future claims. Such reserves for individual disability
insurance products are based on Textron's withdrawal, morbidity, and mortality
experience. Claim reserves are established for future payments not yet due on
claims already incurred, primarily relating to individual disability insurance.
Other policyholder funds represent amounts accumulated under deferred contracts
to provide annuities in the future.
Investments
Securities carried at amortized cost and classified in Textron's held to
maturity category are those which Textron has both the ability and positive
intent to hold to maturity. Securities classified in the available for sale
category are carried at estimated fair value and consist of those securities
which Textron intends to hold for an indefinite period of time but not
necessarily to maturity. Unrealized gains and losses related to securities
available for sale, net of applicable income taxes, are reported as a
separate component of shareholders' equity.
Net realized gains or losses resulting from sales or calls of investments
are included in revenues. The cost of securities sold is determined primarily
on the specific identification method.
36 T E X T R O N
<PAGE> 17
- -------------------------------------------------------------------------------
Inventories
Inventories are carried at the lower of cost or market.
Long-term contracts and programs
Sales under fixed-price contracts and programs are generally recorded as
deliveries are made. Sales under cost reimbursement-type contracts are
recorded as costs are incurred and fees are earned. Certain contracts are
awarded on a fixed-price incentive fee basis. Incentive fees on such
contracts are considered when estimating revenues and profit rates and are
recorded when the amounts can reasonably be determined. Profits expected to
be realized on long-term contracts and programs are based on estimates of
total sales value and costs at completion. (Cost of sales under programs 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.) Such estimates are
reviewed and revised periodically throughout the lives of the contracts and
programs. Revisions to contract profits are recorded in the accounting period
in which the revisions are made. Revisions to program profits are recorded
over the balance of the programs. Estimated losses on contracts and programs
are recorded when identified.
Program accounting has evolved in practice as a method of accounting for
the costs of certain products manufactured under production-type contracts in
connection with long-term programs. The program method, with origins prior to
the issuance in 1981 of SOP 81-1, "Accounting for Performance of Construction-
Type and Certain Production-Type Contracts" and used by a limited number of
companies (mainly commercial airframe manufacturers), consists of estimating
the entire quantity of units to be produced over the life of a program and the
related revenues, costs, and profits to be realized and recognizing those
profits throughout that period. The program method has been used by Textron in
accounting for its subcontract work under the Airbus A330/340 commercial
aircraft program, because 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.
Property, plant and equipment
The cost of property, plant and equipment is being depreciated based on the
estimated useful lives of the assets.
In 1995, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" (FAS 121), which
Textron is required to implement beginning in 1996. An impairment loss must be
recognized to the extent the carrying value of an asset, including any goodwill
relating to the asset, exceeds the fair value of the asset. The adoption of FAS
121 is not expected to have a material effect on Textron's results of
operations.
Goodwill
Goodwill related to Textron's manufacturing operations is being amortized on
the straight-line method over periods ranging from 20 to 40 years. Goodwill
related to Textron's finance and insurance subsidiaries is being amortized on
the straight-line method over 25 years.
Goodwill is reviewed periodically for impairment by comparing the carrying
amount to the estimated future undiscounted cash flows of the businesses
acquired. If this review indicates that goodwill will not be recoverable,
Textron would reduce the carrying amount of the goodwill to its fair value -
generally based on future discounted cash flows - by a noncash charge to
earnings.
Income per common share
Income per common share is based on average common shares outstanding during
each year assuming full conversion of outstanding preferred stock and
exercise of stock options. Such average shares were 86,894,000 in 1995;
90,119,000 in 1994 and 90,052,000 in 1993.
Translation of foreign currencies, foreign exchange transactions and foreign
currency exchange contracts
Adjustments resulting from the translation of the financial statements of
most of Textron's foreign operations are excluded from the determination of
its income and accumulated in a separate component of shareholders' equity
until the entity is sold or substantially liquidated.
T E X T R O N 37
<PAGE> 18
- -------------------------------------------------------------------------------
Foreign exchange gains and losses included in income (which relate
principally to transactions denominated in foreign currencies) have not been
material.
Textron's exposure to foreign exchange rate risk is not significant due to
the diversification of its operations among various divisions and geographic
locations, there being no one significant foreign operation and no significant
exposure to highly inflationary currencies. Textron enters into forward
exchange contracts to hedge the risk associated with currency fluctuations on
certain firm sales and purchase commitments denominated in foreign currencies.
The gains and losses resulting from the impact of currency exchange rate
movements on these contracts are recorded when the underlying transactions
occur. Textron had open foreign currency forward exchange contracts totaling
approximately $191 million and $110 million at December 30, 1995 and December
31, 1994, respectively. The unrealized losses relating to these contracts
aggregated $6 million and $12 million at December 30, 1995 and December 31,
1994, respectively.
Interest rate exchange agreements
Textron's interest rate exchange agreements are accounted for on the accrual
basis. Certain of the agreements are designated against specific long-term
variable rate borrowings and the balance is designated against existing
short-term borrowings, through their maturity, and the anticipated short-term
borrowings which will replace the existing borrowings. Textron continuously
monitors the level of short-term borrowings to ensure that there is a high
degree of probability that its short-term borrowings will remain at a level
in excess of the notional amount of the designated agreements. If Textron
were to determine it probable that the level of anticipated short-term
borrowings will at any time be less than the notional amount of designated
agreements, any excess would be marked to market and the associated gain or
loss recorded in income.
Premiums paid to terminate any such agreements are deferred and
subsequently amortized to expense over the original terms of the agreements.
Upon early extinguishment of any of the underlying debt originally hedged,
unamortized premiums are recognized as an adjustment to the gain or loss on
such early extinguishment.
Income taxes
Deferred income taxes are recognized for temporary differences between the
financial reporting basis and income tax basis of assets and liabilities
based on enacted tax rates expected to be in effect when such amounts are
expected to be realized or settled.
Environmental remediation
Environmental liabilities are recorded based on the most probable cost if
known or on the estimated minimum cost, determined on a site by site basis.
Textron's environmental liabilities are undiscounted and do not take into
consideration any possible future insurance proceeds or any significant
amounts of claims against other third parties.
- -------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
1 Investments
<TABLE>
<CAPTION>
December 30, December 31,
(In millions) 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Debt securities available for sale, at estimated fair value
(amortized cost: $5,006 and $2,556) $5,436<F*> $2,437
Marketable equity securities, at market (cost: $49 and $54) 56 74
- ---------------------------------------------------------------------------------------------------------------------------------
Securities available for sale 5,492 2,511
Debt securities to be held to maturity, at amortized cost (estimated fair value: $2,294) -<F*> 2,470
First mortgages on real estate, at cost (estimated fair value: $345 and $197) 311 191
Insurance policy loans and other investments, at cost
(estimated fair value: $140 and $129) 123 122
- ---------------------------------------------------------------------------------------------------------------------------------
$5,926 $5,294
=================================================================================================================================
<FN>
<F*>Textron, in accordance with the "Guide to Implementation of Statement 115 on Accounting for Certain Investments and Debt
Securities," reviewed its portfolio and transferred all its debt securities from the held to maturity category ($2.6
billion) to the available for sale category as of December 1, 1995. The net unrealized gains, net of applicable income
taxes, relating to the securities reclassified at that date, were recorded as an increase to shareholders' equity. The
transfer had no effect on Textron's net income or cash flows.
</TABLE>
38 T E X T R O N
<PAGE> 19
- -------------------------------------------------------------------------------
<TABLE>
The amortized cost and estimated fair value of securities at the end of
1995 and 1994 were as follows:
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
(In millions) cost gains losses fair value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 30, 1995
Obligations of U.S., foreign and other governments
and government agencies $ 758 $109 $ 2 $ 865
Public utility securities 709 60 - 769
Corporate securities 2,938 241 13 3,166
Mortgage-backed securities<F*> 601 36 1 636
Marketable equity securities 49 7 - 56
- ------------------------------------------------------------------------------------------------------------------
$5,055 $453 $ 16 $5,492
==================================================================================================================
December 31, 1994
Securities available for sale:
Obligations of U.S., foreign and other governments
and government agencies $ 420 $ 5 $ 12 $ 413
Public utility securities 271 2 20 253
Corporate securities 1,055 16 62 1,009
Mortgage-backed securities<F*> 810 9 57 762
Marketable equity securities 54 22 2 74
- ------------------------------------------------------------------------------------------------------------------
2,610 54 153 2,511
- ------------------------------------------------------------------------------------------------------------------
Securities to be held to maturity:
Obligations of U.S., foreign and other governments
and government agencies 347 2 16 333
Public utility securities 501 1 39 463
Corporate securities 1,622 15 139 1,498
- ------------------------------------------------------------------------------------------------------------------
2,470 18 194 2,294
- ------------------------------------------------------------------------------------------------------------------
$5,080 $ 72 $ 347 $4,805
==================================================================================================================
<FN>
<F*>A substantial portion of these securities is guaranteed by the U.S. Government or U.S. Government agencies.
</TABLE>
<TABLE>
The amortized cost and estimated fair value of debt securities at the end
of 1995 by contractual maturity date, were as follows:
<CAPTION>
Amortized Estimated
(In millions) cost fair value
- ---------------------------------------------------------------------
<S> <C> <C>
Due in 1996 $ 282 $ 282
Due 1997 to 2000 511 548
Due 2001 to 2005 1,290 1,370
Due after 2005 2,322 2,600
- ---------------------------------------------------------------------
4,405 4,800
- ---------------------------------------------------------------------
Mortgage-backed securities 601 636
- ---------------------------------------------------------------------
$5,006 $5,436
=====================================================================
</TABLE>
Gross realized gains and losses from sales of securities classified as
available for sale were $105 million and $13 million, respectively, in 1995
and $32 million and $4 million, respectively, in 1994. Investments in the
held to maturity category with an aggregate amortized cost of $8 million and
$10 million in 1995 and 1994, respectively, were sold due to significant
deterioration in the issuers' creditworthiness. Gross gains and losses
realized on sales of debt securities were $14 million and $3 million,
respectively, in 1993. Net realized gains resulting from sales of marketable
equity securities were $9 million in 1993.
T E X T R O N 39
<PAGE> 20
- -------------------------------------------------------------------------------
2 Finance Receivables
<TABLE>
Contractual maturities of finance receivables outstanding at the end of 1995
and total finance receivables outstanding at that date and at the end of 1994
were as follows:
<CAPTION>
Finance receivables
Contractual maturities Less outstanding
------------------------------------ finance ---------------------
(In millions) 1996 1997 After 1997 charges 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Consumer:
Consumer loans $1,775 $1,227 $1,240 $1,221 $3,021 $2,722
Real estate loans 721 511 3,804 2,523 2,513 2,415
Retail installment contracts 904 523 365 656 1,136 1,107
Other 125 87 77 25 264 92
- ---------------------------------------------------------------------------------------------------------------------------------
3,525 2,348 5,486 4,425 6,934 6,336
- ---------------------------------------------------------------------------------------------------------------------------------
Commercial:
Installment contracts 403 307 621 236 1,095 977
Real estate loans 78 83 268 3 426 440
Finance leases 154 154 342 127 523 523
Leveraged leases 9 16 613 311 327 321
Floorplan and other receivables 429 53 119 12 589 487
- ---------------------------------------------------------------------------------------------------------------------------------
1,073 613 1,963 689 2,960 2,748
- ---------------------------------------------------------------------------------------------------------------------------------
$4,598 $2,961 $7,449 $5,114 9,894 9,084
- ------------------------------------------------===================================================------------------------------
Less allowance for credit losses 270 250
Less finance-related insurance reserves
and claims 262 251
- ---------------------------------------------------------------------------------------------------------------------------------
$9,362 $8,583
=================================================================================================================================
</TABLE>
The maximum term over which consumer loans and retail installment contracts
are written is ten years, but approximately 90% of these loans are written
with terms of four years or less. Consumer real estate loans are written with
a maximum term of 15 years. Nonearning consumer loans were $115 million at
the end of 1995.
Commercial installment contracts have initial terms generally ranging from
one to 12 years. Commercial real estate loans have initial terms generally
ranging from three to five years. Finance leases have initial terms generally
up to 12 years. Nonearning commercial loans were $99 million at the end of
1995.
Accounts are often repaid or refinanced prior to contractual maturity.
Accordingly, the foregoing tabulation should not be regarded as a forecast of
future cash collections. In 1995 and 1994, cash collections of receivables
(excluding finance charges) were $5.7 billion and $4.7 billion, respectively.
The ratio of cash collections to average net receivables was approximately
63% and 58%, respectively.
Textron had both fixed rate and variable rate loan commitments in the
amount of $698 million at December 30, 1995. Generally, interest rates on these
commitments are not set until the loans are funded; therefore, Textron is not
exposed to interest rate changes.
3 Long-term Contract and Program Receivables
Long-term contract and program receivables at December 30, 1995 and December
31, 1994 aggregated $175 million and $153 million, respectively, including
$81 million and $69 million, respectively, of unbilled costs and accrued
profits on long-term contracts for which the contractual criteria for billing
had not yet been met. An estimated $40 million and $53 million, respectively,
of the unbilled amounts are not expected to be collected within one year.
There are no significant amounts included in receivables which represent
balances billed but unpaid under contractual retainage provisions or
significant long-term contract receivables subject to uncertainty as to
collection.
4 Inventories
<TABLE>
<CAPTION>
December 30, December 31,
(In millions) 1995 1994
- ---------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 352 $ 288
Work in process 911 948
Raw materials 217 212
- ---------------------------------------------------------------------
1,480 1,448
Less progress and advance payments 196 237
- ---------------------------------------------------------------------
$1,284 $1,211
=====================================================================
</TABLE>
40 T E X T R O N
<PAGE> 21
- -------------------------------------------------------------------------------
Inventories aggregating $754 million at December 30, 1995 and $664 million
at December 31, 1994 were valued by the last-in, first-out (LIFO) method. (Had
such LIFO inventories been valued at current costs, their carrying values
would have been approximately $139 million and $144 million higher at those
respective dates.) The remaining inventories, other than those related to
certain long-term contracts and programs, are valued generally by the
first-in, first-out method.
Inventories related to long-term contracts and programs, net of progress
and advance payments, were $393 million at December 30, 1995 and $451 million
at December 31, 1994. Such inventories include unamortized tooling and deferred
learning costs - $171 million at December 30, 1995; $176 million at December
31, 1994; and $162 million at January 1, 1994 - relating 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 1995 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 191 and 207 sets of wing components, respectively; the
corresponding orders as of the end of 1994 were 150 and 207, respectively,
and as of the end of 1993 were 114 and 157, respectively. (Airbus Industrie
had firm orders as of the end of 1995 for 274 A330/340s.) Textron has
delivered 147 units to one customer and 140 units to the other customer
through the end of 1995; deliveries in 1995 were 27 and 34 units, in 1994
were 36 and 42 units, and in 1993 were 33 and 30 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, 1995 - that is, assuming the Airbus A330/340 aircraft program were
to be canceled after Textron completed deliveries under those orders - was $154
million (the corresponding amounts at the end of 1994 and 1993 were $157
million and $185 million, respectively). Textron continues to believe that in
light of the orders to date, the outlook for the aircraft in the marketplace,
and the customer contractual arrangements that exist on this program, it will
recover all such costs.
As to government contracts, inventory costs also include general and
administrative expenses ($14 million at December 30, 1995; $30 million at
December 31, 1994), substantially all of which are clearly related to
production.
5 Property, Plant and Equipment
<TABLE>
<CAPTION>
December 30, December 31,
(In millions) 1995 1994
- ---------------------------------------------------------------------
<S> <C> <C>
At cost:
Land and buildings $ 760 $ 704
Machinery and equipment 2,300 1,999
- ---------------------------------------------------------------------
3,060 2,703
Less accumulated depreciation 1,652 1,450
- ---------------------------------------------------------------------
$1,408 $1,253
=====================================================================
</TABLE>
6 Insurance Reserves and Claims
<TABLE>
<CAPTION>
December 30, December 31,
(In millions) 1995 1994
- ---------------------------------------------------------------------
<S> <C> <C>
Paul Revere:
Future policy benefits $1,371 $1,193
Unpaid claims and claim expenses 1,852 1,576
Other policyholder funds 1,876 1,714
Other 259 202
- ---------------------------------------------------------------------
$5,358 $4,685
=====================================================================
</TABLE>
Establishment of insurance reserves requires making various actuarial
assumptions. While actual experience could differ from the assumed actuarial
experience underlying its policy and claim reserves, Textron believes that
these reserves have been determined on reasonable bases and are adequate. The
continued decline in market interest rates and/or the absence of morbidity
improvements, could result in adjustments to reserve amounts and deferred
costs. Paul Revere has undertaken underwriting and claims management measures
to mitigate the impact of these potential occurrences.
T E X T R O N 41
<PAGE> 22
- -------------------------------------------------------------------------------
7 Debt and Credit Facilities
<TABLE>
The Textron Parent Company Borrowing Group and Textron's finance and insurance
subsidiaries are independent borrowers, and, accordingly, their debt is
supported by their own respective assets and cash flows. At the end of 1995 and
1994, debt consisted of the following:
<CAPTION>
December 30, December 31,
(In millions) 1995 1994
- ---------------------------------------------------------------------------------------------------
Textron Parent Company Borrowing Group:
<S> <C> <C>
Senior:
Borrowings under or supported by long-term credit facilities<F*> $ 882 $ 432
8.75% - 10.04%; due 1996 to 2022 254 241
Medium-term notes; due 1996 to 2011 (average rate - 9.3%) 333 357
Variable rate notes due 2000 to 2002 (average rate - 6.7%) 150 365
Other notes (average rate - 6.0%) 126 158
- ---------------------------------------------------------------------------------------------------
Total senior 1,745 1,553
- ---------------------------------------------------------------------------------------------------
Subordinated - 8.86% - 8.97%; due 1998 to 1999 29 29
- ---------------------------------------------------------------------------------------------------
Total Textron Parent Company Borrowing Group 1,774 1,582
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Finance and insurance subsidiaries:
<S> <C> <C>
Senior:
Borrowings under or supported by credit facilities<F**> 3,462 3,392
4.93% - 5.91%; due 1996 to 2000 896 1,322
6% - 7.99%; due 1996 to 2002 2,550 1,509
8% - 9.82%; due 1996 to 2000 834 710
10.4% - 11.85%; due 1996 to 1998 101 267
Variable rate notes due 1996 to 2000 (average rate - 6.1%) 597 543
- ---------------------------------------------------------------------------------------------------
Total senior 8,440 7,743
- ---------------------------------------------------------------------------------------------------
Senior subordinated - 10.28% - 11.56%; due 1996 to 1998 35 39
- ---------------------------------------------------------------------------------------------------
Total finance and insurance subsidiaries 8,475 7,782
- ---------------------------------------------------------------------------------------------------
Total debt $10,249 $9,364
===================================================================================================
<FN>
<F*>The weighted average interest rates on these borrowings, before consideration of the effect of
interest rate exchange agreements, at the end of 1995, 1994, and 1993 were 6.1%, 6.2%, and
3.6%, respectively. The corresponding weighted average interest rates on these borrowings
during the years 1995, 1994, and 1993 were 6.1%, 4.4%, and 3.4%, respectively.
<F**>The weighted average interest rates on these borrowings, before consideration of the effect of
interest rate exchange agreements, at the end of 1995, 1994, and 1993 were 6.3%, 6.1%, and
3.7%, respectively. The corresponding weighted average interest rates on these borrowings
during the years 1995, 1994, and 1993 were 6.4%, 4.7%, and 3.7%, respectively.
</TABLE>
<TABLE>
Required payments and sinking fund requirements during the next five years
on debt outstanding at December 30, 1995 (excluding amounts that might become
payable under credit facilities and revolving credit agreements) are as
follows:
<CAPTION>
(In millions) 1996 1997 1998 1999 2000
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Textron Parent Company Borrowing Group $ 62 $ 66 $ 20 $ 52 $ 134
Finance and insurance subsidiaries 1,001 713 972 651 1,277
- ------------------------------------------------------------------------------------------------------------------
$1,063 $779 $992 $703 $1,411
==================================================================================================================
</TABLE>
The Textron Parent Company Borrowing Group maintains credit facilities with
various banks for borrowing funds on both a short- and a long-term basis. It
has a credit agreement with 36 banks aggregating $1.5 billion which is
available on a fully revolving basis until July 1, 2000. The portion of the
credit facility not used or reserved as support for commercial paper or bank
borrowings at December 30, 1995 was $681 million.
Textron's finance subsidiaries have lines of credit with various banks
aggregating $4.4 billion at December 30, 1995. The subsidiaries' lines of
credit not used or reserved as support for commercial paper or bank
borrowings at December 30, 1995 were $322 million.
42 T E X T R O N
<PAGE> 23
- -------------------------------------------------------------------------------
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 30, 1995, approximately
$376 million of their net assets of $2.6 billion was available to be
transferred to the Textron Parent Company Borrowing Group pursuant to these
restrictions. The finance subsidiaries' loan agreements also contain
restrictions regarding additional debt, the creation of liens or guarantees,
and the making of investments.
Interest rate exchange agreements
<TABLE>
As part of managing its interest rate risk, Textron utilizes interest rate
exchange agreements. The objective is not to speculate for profit, but,
rather, is to convert variable rate debt into fixed rate debt, with respect
to specific designated borrowings. These agreements do not involve a high
degree of complexity or risk. During 1995, the finance subsidiaries had $759
million of interest rate exchange agreements go into effect. The agreements
in effect at the end of 1995 and 1994, which had weighted average original
terms of 8.3 years at both dates for the Textron Parent Company Borrowing
Group and 3.2 years and 3.5 years, respectively, for the finance
subsidiaries, had the effect of fixing the rate of interest on variable rate
borrowings as follows:
<CAPTION>
December 30, 1995 December 31, 1994
- ------------------------------------------------------------------------------------------------------------------
Interest rate exchange agreements Weighted Weighted
Notional average Notional average
(Dollars in millions) amount interest rate amount interest rate
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Textron Parent Company Borrowing Group $ 602<F*> 8.80% $ 571 8.79%
Finance subsidiaries 1,338<F**> 7.79 824 8.12
- ------------------------------------------------------------------------------------------------------------------
$1,940 8.10 $1,395 8.40
==================================================================================================================
<FN>
<F*>$150 million of the Textron Parent Company Borrowing Group's interest rate exchange agreements were
designated against specific long-term variable rate notes and the balance was designated against existing and
anticipated short-term variable rate borrowings. The effect of these agreements on the average rate of
interest on the related borrowings was to adjust those rates on the long-term variable rate notes from an
average of 6.7% to 9.0% and on the short-term variable rate borrowings from 6.1% to 8.6%. The interest rate
exchange agreements in effect at the end of 1995 expire as follows: $172 million (8.7%) in 1996, $24 million
(6.7%) in 1997, $100 million (9.0%) in 1998, and $306 million (8.9%) after 1999.
<F**>$275 million of the finance subsidiaries interest rate exchange agreements were designated against specific
long-term variable rate notes and the balance was designated against existing and anticipated short-term
variable rate borrowings. The effect of these agreements on the average rate of interest on the related
borrowings was to adjust those rates on the long-term variable rate notes from an average of 6.1% to 6.5% and
on the short-term variable rate borrowings from 6.4% to 8.2%. The interest rate exchange agreements in effect
at the end of 1995 expire as follows: $341 million (8.8%) in 1996, $260 million (8.6%) in 1997, $460 million
(7.4%) in 1998, $262 million (6.5%) in 1999, and $15 million (6.7%) thereafter.
</TABLE>
The finance subsidiaries have interest rate exchange agreements that have
the effect of exchanging the indices used to determine interest expense under
certain variable rate borrowings for the purpose of better matching the rate
of interest incurred on their financing with the rate of interest earned on
certain of their variable rate finance receivables. At the end of 1995, $250
million of such agreements were in effect. The agreements expire in 1996.
Also, the finance subsidiaries have fixed-pay interest rate exchange
agreements which become effective in 1996. These agreements expire through
1999 and will fix the rate of interest at 8.1% on $204 million of variable
rate borrowings. The agreements will mitigate the exposure to increases in
interest rates primarily by replacing maturing fixed-pay swap agreements and
fixed-rate notes.
Textron did not have any exposure to loss in the event of nonperformance
by the counterparties to its interest rate exchange agreements at either
December 30, 1995 or December 31, 1994. While Textron may become exposed to
loss for the periodic settlement of amounts due from counterparties in the
event of nonperformance, Textron does not anticipate nonperformance by any of
those parties. Textron believes that such risk is minimized by entering into
contracts only with major, financially sound counterparties having no less
than a long-term bond rating of "A," continuously monitoring the credit
ratings of such counterparties, and limiting the amount of agreements entered
into with any one financial institution. The amounts potentially subject to
credit risk are generally limited to the amounts, if any, by which the
counterparties obligations under the contracts exceed the obligations of
Textron to the same counterparties.
T E X T R O N 43
<PAGE> 24
- -------------------------------------------------------------------------------
8 Shareholders' Equity
Preferred stock
Each share of $2.08 Preferred Stock ($23.63 approximate stated value) is
convertible into 2.2 shares of common stock and is redeemable by Textron at
$50 per share.
Each share of $1.40 Preferred Dividend Stock ($11.82 approximate stated
value) is convertible into 1.8 shares of common stock and is redeemable by
Textron at $45 per share.
Preferred stock purchase rights
One-half of a Preferred Stock Purchase Right (Right) is attached to each
outstanding share of common stock. Each whole Right entitles the holder to
buy one unit of Series C Junior Participating Preferred Stock at an exercise
price of $175. The Rights will become exercisable only under certain
circumstances related to a person or group acquiring or offering to acquire a
substantial block of Textron's common stock. If certain additional events
then occur, each whole Right will allow holders of units to acquire common
stock of Textron, or in some cases of an acquiring entity, having a value
equal to twice the exercise price. The Rights expire in March 1996.
In September 1995, Textron's Board of Directors approved the issuance of
new Preferred Stock Purchase Rights (New Rights) to replace the existing Rights
when they expire. One New Right will be attached to each outstanding share of
common stock and, when exercisable, will entitle the holder to buy one
one-hundredth of a share of Series C Junior Participating Preferred Stock at
an exercise price of $250. The New Rights expire in September 2005, but may
be redeemed earlier at a price of $.05 per Right.
Stock options and performance awards
<TABLE>
In April 1994, Textron's shareholders approved the adoption of the 1994
Long-Term Incentive Plan which authorizes the granting of awards to key
employees in the following forms: (a) performance share units and (b) options
to purchase Textron common stock at an exercise price equal to the fair value
of the stock at the date of grant. The total number of shares of common stock
for which options may be granted under the Plan is 5,000,000. Stock option
transactions during 1995 are summarized as follows:
<CAPTION>
(Shares in thousands) Shares Average price
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares under option at beginning of year 4,696 $44.31
Options granted 1,062 72.11
Options exercised (349 shares in 1994 and 701 shares in 1993) (1,098) 38.26
Options canceled (102) 51.13
- ---------------------------------------------------------------------------------------------------
Shares under option at end of year 4,558 52.09
===================================================================================================
Shares exercisable at end of year (2,957 shares in 1994) 2,944 45.38
===================================================================================================
</TABLE>
Reserved shares
<TABLE>
Shares of common stock reserved at December 30, 1995 for the subsequent
conversion of preferred stock and the exercise of stock options were as
follows:
<CAPTION>
(In thousands) Shares
- ------------------------------------------------------------------------------------
<S> <C>
$2.08 Cumulative Convertible Preferred Stock, Series A<F*> 739
$1.40 Convertible Preferred Dividend Stock, Series B<F*> 1,088
Options granted to employees 4,558
- ------------------------------------------------------------------------------------
6,385
====================================================================================
<FN>
<F*>Includes shares issuable upon conversion of shares of preferred stock held as
treasury shares.
</TABLE>
9 Leases
Rental expense was approximately $119 million, $124 million, and $128 million
in 1995, 1994, and 1993, respectively. Future minimum rental commitments for
all noncancellable operating leases in effect at December 30, 1995
approximated $83 million for 1996, $64 million for 1997, $47 million for
1998, $34 million for 1999, $25 million for 2000, and a total of $144 million
thereafter.
44 T E X T R O N
<PAGE> 25
- -------------------------------------------------------------------------------
10 Research and Development
Textron performs research and development under both company initiated
programs and contracts with others, primarily the U.S. Government. Company
initiated programs include research and development for commercial products
and independent research and development related to government products and
services. A significant portion of the cost incurred for independent research
and development is recoverable from the U.S. Government through overhead cost
allowances.
<TABLE>
The costs related to research and development activities for which Textron
is at risk are expensed as incurred and include amounts for (a) company
initiated programs and (b) the cost sharing portions of, and any losses
incurred on, customer initiated programs. These costs for 1995, 1994, and
1993 were as follows:
<CAPTION>
(In millions) 1995 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Company funded $181 $187 $195
Customer funded 475 424 319
- ------------------------------------------------------------------------------------
Total research and development costs $656 $611 $514
====================================================================================
</TABLE>
11 Pension Benefits
Textron and certain of its subsidiaries have a number of defined benefit
pension plans covering substantially all of their employees. Benefits under
salaried plans are based on salary and years of service, while benefits under
hourly plans generally are based on negotiated amounts and years of service.
Textron's funding policy is consistent with the funding requirements of
federal law and regulations. Plan assets consist principally of corporate and
government bonds and common stocks.
<TABLE>
Pension cost (income) in 1995, 1994, and 1993 included the following
components:
<CAPTION>
(In millions) 1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the year $ 59 $ 72 $ 67
Interest cost on projected benefit obligation 216 205 188
Actual return on plan assets (758) (25) (370)
Amortization of unrecognized transition net asset (18) (16) (16)
Net amortization and deferral of actuarial gains (losses) 486 (235) 134
- ---------------------------------------------------------------------------------------------------
Net pension cost (income) $ (15) $ 1 $ 3
===================================================================================================
</TABLE>
The following table sets forth the funded status of Textron's pension
plans at December 30, 1995 and December 31, 1994.
<TABLE>
<CAPTION>
December 30, 1995 December 31, 1994
- ---------------------------------------------------------------------------------------------------------------------------------
Assets Accumulated Assets Accumulated
exceed benefits exceed benefits
accumulated exceed accumulated exceed
(In millions) benefits assets benefits assets
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation $2,182 $ 426 $1,806 $ 519
Nonvested benefit obligation 94 35 78 35
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligation 2,276 461 1,884 554
Additional amounts related to projected pay increases 264 23 207 17
- ---------------------------------------------------------------------------------------------------------------------------------
Projected benefit obligation 2,540 484 2,091 571
Plan assets at fair value 3,266 373 2,669 449
- ---------------------------------------------------------------------------------------------------------------------------------
Plan assets in excess of (less than) projected
benefit obligation 726 (111) 578 (122)
Unrecognized net actuarial gains (304) (26) (171) (19)
Unrecognized prior service cost 16 58 16 61
Unrecognized transition net asset (135) (1) (151) (3)
Adjustment required to recognize minimum liability - (24) - (27)
- ---------------------------------------------------------------------------------------------------------------------------------
Net pension asset (liability) recognized on the
consolidated balance sheet $ 303 $ (104) $ 272 $ (110)
=================================================================================================================================
</TABLE>
T E X T R O N 45
<PAGE> 26
- -------------------------------------------------------------------------------
Major actuarial assumptions used in the accounting for the defined benefit
pension plans are shown in the following table. Net pension cost (income) is
determined using these factors as of the end of the prior year; the funded
status of the plans is determined using the discount rate and rate of
compensation increase as of the end of the current year.
<TABLE>
<CAPTION>
December 30, December 31, January 1, January 2,
1995 1994 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Discount rate 7.25% 8.25% 7.25% 8.00%
Weighted average long-term rate of compensation increase 5.00 5.00 5.00 5.50
Long-term rate of return on plan assets 9.00 9.00 9.00 9.00
==================================================================================================================
</TABLE>
12 Employee Benefits Other than Pensions
Textron and certain of its subsidiaries have a number of defined contribution
savings and other retirement plans, covering both salaried and hourly
employees. Costs relating to these plans, which are generally funded as
accrued, amounted to approximately $36 million, $37 million, and $33 million
for 1995, 1994, and 1993, respectively, of which $14 million, $18 million,
and $17 million related to the employee stock ownership plan for 1995, 1994,
and 1993, respectively.
<TABLE>
Textron provides certain health care and life insurance benefits for certain
retired employees. Postretirement benefit costs other than those related to
pensions in 1995, 1994, and 1993 included the following components:
<CAPTION>
(In millions) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the year $ 5 $ 9 $ 9
Interest cost on accumulated postretirement benefit obligation 59 62 68
Net amortization (14) (10) (6)
- ------------------------------------------------------------------------------------------------------------------
Postretirement benefit costs $50 $61 $71
==================================================================================================================
</TABLE>
<TABLE>
Textron's postretirement benefit plans other than pensions currently are
not funded. The following table sets forth the status of these plans at the end
of 1995 and 1994:
<CAPTION>
December 30, December 31,
(In millions) 1995 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefits attributed to:
Retirees $622 $613
Fully eligible active plan participants 91 77
Other active plan participants 97 89
- ------------------------------------------------------------------------------------------------------------------
Accumulated postretirement benefit obligation 810 779
Unrecognized net actuarial gains 104 148
Unrecognized prior service cost benefit 24 24
- ------------------------------------------------------------------------------------------------------------------
Postretirement benefit liability recognized on the consolidated balance sheet $938 $951
==================================================================================================================
</TABLE>
An assumed discount rate of 8.25% and 7.25% was used to determine
postretirement benefit costs other than pensions for 1995 and 1994,
respectively. An assumed discount rate of 7.25% and 8.25% was used to
determine the status of Textron's plans at December 30, 1995 and December 31,
1994, respectively. The weighted average annual assumed rate of increase in
the per capita cost of covered benefits (that is, the health care cost trend
rate) is 7% for retirees age 65 and over and 11% for retirees under age 65 in
1996, and both rates are assumed to decrease gradually to 5.5% until 2001 and
2003, respectively, and remain at that rate thereafter. Increasing these
rates by one percentage point in each year would have increased the
accumulated postretirement benefit obligation as of December 30, 1995 by $61
million and increased the aggregate of the service and interest cost
components of postretirement benefit costs for 1995 by $5 million.
46 T E X T R O N
<PAGE> 27
- -------------------------------------------------------------------------------
13 Income Taxes
Textron files a consolidated federal income tax return which includes all
U.S. subsidiaries. Separate returns are filed for Textron's foreign
subsidiaries.
<TABLE>
Income before income taxes is summarized as follows:
<CAPTION>
(In millions) 1995 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $568 $543 $471
Foreign 245 211 145
- ------------------------------------------------------------------------------------
Total $813 $754 $616
====================================================================================
</TABLE>
<TABLE>
Income taxes are summarized as follows:
<CAPTION>
(In millions) 1995 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $119 $114 $129
State 44 31 30
Foreign 66 71 47
- ------------------------------------------------------------------------------------
229 216 206
- ------------------------------------------------------------------------------------
Deferred:
Federal 86 80 27
State (10) 4 1
Foreign 16 8 -
- ------------------------------------------------------------------------------------
92 92 28
- ------------------------------------------------------------------------------------
Total $321 $308 $234
====================================================================================
</TABLE>
<TABLE>
Following is a reconciliation of the federal statutory income tax rate to
the effective income tax rate as reflected in the consolidated statement of
income:
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory income
tax rate 35.0% 35.0% 35.0%
Increase (decrease) in
taxes resulting from:
State income taxes 2.8 3.0 3.3
Goodwill 2.5 5.3 3.0
Effect of tax rate
change on net
deferred tax asset - - (1.4)
Other - net (.8) (2.5) (1.9)
- ------------------------------------------------------------------------------------
Effective income
tax rate 39.5% 40.8%<F*> 38.0%
====================================================================================
<FN>
<F*>The increase in the effective income tax rate is due primarily to the impact
of the nontax deductibility of goodwill related to the sale of the Lycoming
Turbine Engine division.
</TABLE>
Textron's net deferred tax asset (liability) consisted of gross deferred
tax assets and gross deferred tax liabilities of $1,414 million and $1,430
million, respectively, at December 30, 1995 and $1,373 million and $1,174
million, respectively, at December 31, 1994.
<TABLE>
The components of Textron's net deferred tax asset (liability) as of
December 30, 1995 and December 31, 1994 were as follows:
<CAPTION>
December 30, December 31,
(In millions) 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Obligation for postretirement benefits other than pensions $ 371 $ 371
Finance subsidiary transactions, principally leasing (324) (295)
Insurance policy acquisition costs (253) (253)
Other insurance liabilities 162 171
Investment valuation (161) -
Fixed assets, principally depreciation (146) (123)
Deferred compensation and vacation pay 86 66
Allowance for credit losses 85 92
Liabilities for future policy benefits 73 63
Other, principally timing of other expense deductions 91 107
- ---------------------------------------------------------------------------------------------------
$ (16) $ 199
===================================================================================================
</TABLE>
Deferred income taxes have not been provided for the undistributed earnings
of foreign subsidiaries which aggregated approximately $644 million at the
end of 1995. Management intends to reinvest such undistributed earnings for
an indefinite period, except for distributions upon which incremental taxes
would not be material. If all such earnings were distributed, taxes (net of
foreign tax credits) would be increased by approximately $43 million,
principally due to foreign withholding taxes.
At the end of 1995, consolidated shareholders' equity included $84 million
of U.S. life insurance subsidiaries' policyholders' surplus on which no income
taxes have been provided. The amount of taxes which would become due if the
surplus were distributed to the life insurance subsidiaries' shareholders is
approximately $29 million. Under present circumstances, it is not anticipated
that any of these earnings will become taxable.
T E X T R O N 47
<PAGE> 28
- -------------------------------------------------------------------------------
14 Fair Value of Financial Instruments
The estimated fair value amounts indicated below have been determined by
using available market information and appropriate valuation methodologies.
However, considerable judgment is required in interpreting market data to
develop the estimates of fair value and, accordingly, the estimates presented
herein are not necessarily indicative of the amounts that could be realized
in a current market exchange.
<TABLE>
<CAPTION>
December 30, 1995 December 31, 1994
- ---------------------------------------------------------------------------------------------------
Estimated Estimated
Carrying fair Carrying fair
(In millions) value value value value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments $5,926 $5,977 $5,294 $5,131
Finance receivables:
Consumer loans 6,475 6,457 6,074 6,062
Commercial loans 2,050 2,087 1,846 1,862
Liabilities:
Other policyholder funds 1,876 1,849 1,714 1,694
Debt:
Textron Parent Company Borrowing Group:
Debt 1,774 1,873 1,582 1,597
Interest rate exchange agreements - 57 - 25
Finance and insurance subsidiaries:
Debt 8,475 8,595 7,782 7,686
Interest rate exchange agreements - 5 - (25)
Foreign currency exchange contracts - 6 - 12
- ---------------------------------------------------------------------------------------------------
Notes:
(i) Investments - The estimated fair values of investment securities were based on quoted market
prices where available, appraisals, prices from independent brokers or discounted cash flow
analyses.
(ii) Finance receivables - The estimated fair values of fixed rate consumer loans, real estate
loans and commercial installment contracts were estimated based on discounted cash flow
analyses. The estimated fair value of all variable rate receivables and fixed rate retail
installment contracts approximated the net carrying value. The estimated fair values of
nonperforming loans were based on independent appraisals, discounted cash flow analyses,
using risk adjusted interest rates, or Textron valuations based upon the fair value of the
related collateral.
(iii) Other policyholder funds - The estimated fair value was based on the cash surrender value of
Paul Revere's financial products portfolio.
(iv) Debt, interest rate exchange agreements, and foreign currency exchange contracts - The
estimated fair value of fixed rate debt was determined by either independent investment
bankers or discounted cash flow analyses. The fair values of variable rate debt approximated
their carrying values. The estimated fair values of interest rate exchange agreements were
determined by independent investment bankers and represent the estimated amounts that
Textron or its counterparty would be required to pay to assume the other party's obligations
under the agreements. The estimated fair values of the foreign currency exchange contracts
were determined by Textron's foreign exchange banks.
</TABLE>
15 Contingencies
There are pending or threatened against Textron and its subsidiaries lawsuits
and other proceedings, some of which allege violations of federal government
procurement regulations, involve environmental matters, or are or purport to
be class actions. Among these suits and proceedings are some which seek
compensatory, treble or punitive damages in substantial amounts; fines,
penalties or restitution; or the remediation of allegedly hazardous wastes;
or, which under federal government procurement regulations could result in
suspension or debarment of Textron or its subsidiaries from U.S. Government
contracting for a period of time. On the basis of information presently
available, Textron believes that any liability for these suits and
proceedings, or the impact of the application of such government regulations,
would not have a material effect on Textron's net income or financial
condition.
Textron's accrued estimated environmental liabilities are based on
assumptions which are subject to a number of factors and uncertainties which
can affect the reliability and precision of such accruals, including
additional sites which may be identified, environmental regulations, level of
cleanup required and technologies available, number and financial condition
of other contributors to remediation, and time period over which remediation,
may occur. It is estimated that Textron's accrued environmental remediation
liabilities will be paid primarily over the next five to ten years.
48 T E X T R O N
<PAGE> 29
- -------------------------------------------------------------------------------
16 Geographic and Business Segment Data
Presented below and on page 22 is selected financial information by
geographic area and business segment, and a description of the nature of
Textron's operations.
<TABLE>
Geographic areas
<CAPTION>
Revenues by origin Income by origin
------------------------------------ ------------------------------------
(In millions) 1995 1994 1993 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United States $8,207 $8,299 $7,956 $ 865 $ 825 $ 788
Canada 961 833 773 118 119 87
Asia/Pacific 412 231 167 64 46 35
Western Europe 393 318 178 63 46 23
- ---------------------------------------------------------------------------------------------------------------------------------
$9,973 $9,681 $9,074 1,110 1,036 933
- ------------------------------------------------====================================---------------------------------------------
Corporate expenses and other - net (98) (78) (85)
Interest expense - net (199) (204) (232)
- ---------------------------------------------------------------------------------------------------------------------------------
Income before income taxes $ 813 $ 754 $ 616
=================================================================================================================================
</TABLE>
<TABLE>
Destination of U.S. exports
------------------------------------
(In millions) 1995 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Western Europe $ 306 $ 427 $ 476
Asia/Pacific 235 161 236
Canada 208 252 214
Mexico 72 146 114
Middle East 43 62 113
Other locations 136 148 143
- ------------------------------------------------------------------------------------
$1,000 $1,196 $1,296
====================================================================================
</TABLE>
<TABLE>
Identifiable assets
-------------------------------------
(In millions) 1995 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $18,395 $16,827 $16,155
Canada 2,008 1,800 1,674
Asia/Pacific 1,348 766 546
Western Europe 1,077 949 501
Corporate 467 642 834
Eliminations (123) (59) (52)
- ------------------------------------------------------------------------------------
$23,172 $20,925 $19,658
====================================================================================
Notes:
(i) Revenues include sales to the U.S. Government of $1.3 billion, $1.6 billion,
and $1.6 billion in 1995, 1994, and 1993, respectively.
(ii) Revenues between geographic areas, predominantly revenues of U.S. divisions,
were approximately 4% of total revenues in each of 1995, 1994, and 1993,
respectively.
(iii) Assets in foreign locations relate principally to the Financial Services
segments.
</TABLE>
Nature of operations
<TABLE>
Textron is a global multi-industry company with manufacturing and financial
services operations. Its principal markets (listed within segments in order
of the amount of 1995 revenues) and the major locations of such markets are
as follows:
<CAPTION>
Segment Principal markets Major locations
==================================================================================================================
<S> <C> <C>
Aircraft Military and commercial light and mid-sized helicopters; North America and Asia/Pacific
light and mid-sized business jets; and single-engine
utility turboprop aircraft
- ------------------------------------------------------------------------------------------------------------------
Automotive Automotive products sold to original equipment North America
manufacturers
- ------------------------------------------------------------------------------------------------------------------
Industrial Fastening systems; golf and turf care equipment; and North America and Western Europe
diversified products
- ------------------------------------------------------------------------------------------------------------------
Systems and Commercial aerospace and defense products North America and Western Europe
Components
- ------------------------------------------------------------------------------------------------------------------
Finance Consumer and commercial loans North America, Asia/Pacific and
Western Europe
- ------------------------------------------------------------------------------------------------------------------
Paul Revere Disability insurance for professionals, corporate North America
executives, and small business owners
</TABLE>
T E X T R O N 49
<PAGE> 30
- -------------------------------------------------------------------------------
17 Condensed Financial Information for Textron's Finance and Insurance
Subsidiaries
<TABLE>
<CAPTION>
Statement of Income (In millions)
For each of the three years ended December 31, 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues
Interest, discount and service charges $1,565 $1,333 $1,260
Insurance premiums 1,412 1,233 1,137
Investment income (including net realized investment gains) 528 437 406
- ------------------------------------------------------------------------------------------------------------------
Total revenues 3,505 3,003 2,803
- ------------------------------------------------------------------------------------------------------------------
Costs and expenses
Selling and administrative 902 821 790
Interest 614 459 432
Provision for losses on collection of finance receivables, less recoveries 169 162 153
Insurance benefits 1,332 1,099 993
- ------------------------------------------------------------------------------------------------------------------
Total costs and expenses 3,017 2,541 2,368
- ------------------------------------------------------------------------------------------------------------------
Income before income taxes 488 462 435
Income taxes (189) (179) (173)
- ------------------------------------------------------------------------------------------------------------------
Net income 299 283 262
Minority interest in net income (13) (13) (3)
- ------------------------------------------------------------------------------------------------------------------
Textron's equity in net income $ 286 $ 270 $ 259
==================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
December 31, December 31,
Balance Sheet (In millions) 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash $ 43 $ 29
Investments 5,919 5,265
Finance receivables - net 9,370 8,622
Other 2,536 1,932
- ---------------------------------------------------------------------------------------------------
Total assets $17,868 $15,848
===================================================================================================
Liabilities and equity
Accounts payable and accrued liabilities (including income taxes) $ 1,166 $ 953
Insurance reserves and claims 5,358 4,685
Debt 8,475 7,782
Equity:
Textron 2,636 2,246
Minority interest 233 182
- ---------------------------------------------------------------------------------------------------
Total liabilities and equity $17,868 $15,848
===================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Statement of Cash Flows (In millions)
For each of the three years ended December 31, 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net cash provided by operating activities $ 843 $ 842 $ 811
Net cash used by investing activities (1,032) (1,833) (1,335)
Net cash provided by financing activities 203 1,006 535
- ------------------------------------------------------------------------------------------------------------------
Net increase in cash 14 15 11
Cash at beginning of year 29 14 3
- ------------------------------------------------------------------------------------------------------------------
Cash at end of year $ 43 $ 29 $ 14
==================================================================================================================
(i) TFC derives a substantial portion of its business from financing the sale and lease of products manufactured
and sold by Textron. In 1995, 1994, and 1993, TFC paid Textron $461 million, $595 million, and $617 million,
respectively, for the purchase of receivables and operating lease equipment. Under operating agreements with
Textron, TFC generally has recourse to Textron with respect to finance receivables and leases of products
manufactured and sold by Textron. At the end of 1995, finance receivables and operating lease equipment of
$723 million ($852 million at the end of 1994) were due from Textron or subject to recourse to Textron.
(ii) Textron has agreed to cause TFC's pretax income available for fixed charges to be not less than 125% of its
fixed charges and its consolidated shareholder's equity to be not less than $200 million. No related
payments were required for 1995, 1994, or 1993.
(iii) Approximately 76%, 76%, and 73% of the credit life and credit disability insurance premiums earned and 21%,
25%, and 22% of the casualty insurance premiums earned in 1995, 1994, and 1993, respectively, were related
directly to AFS' consumer loan activities.
(iv) In the third quarter of 1995, Paul Revere transferred $561 million of its investments into a trust fund in
connection with a reinsurance transaction.
</TABLE>
50 T E X T R O N
<PAGE> 31
- -------------------------------------------------------------------------------
Quarterly Financial Information for 1995 and 1994
<TABLE>
<CAPTION>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
(Unaudited) ---------------- ---------------- ---------------- ----------------
(In millions except per share
amounts) 1995 1994 1995 1994 1995 1994 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues
Manufacturing $1,554 $1,688 $1,651 $1,775 $1,558 $1,621 $1,705 $1,594
Financial Services 833 720 851 741 867 759 954 783
- ------------------------------------------------------------------------------------------------------------------------------
Total revenues $2,387 $2,408 $2,502 $2,516 $2,425 $2,380 $2,659 $2,377
==============================================================================================================================
Income
Manufacturing $ 140 $ 119 $ 164 $ 136 $ 152 $ 146 $ 166 $ 173
Financial Services 116 120 115 120 131 114 126 108
- ------------------------------------------------------------------------------------------------------------------------------
Operating income 256 239 279 256 283 260 292 281
Corporate expenses and other - net (21) (17) (22) (17) (29) (24) (26) (20)
Interest expense - net (50) (53) (52) (54) (46) (51) (51) (46)
- ------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 185 169 205 185 208 185 215 215
Income taxes (73) (65) (81) (71) (82) (71) (85) (101)<F*>
Elimination of minority interest
in net income of Paul Revere (3) (4) (3) (4) (4) (3) (3) (2)
- ------------------------------------------------------------------------------------------------------------------------------
Net income $ 109 $ 100 $ 121 $ 110 $ 122 $ 111 $ 127 $ 112
==============================================================================================================================
Net income per common share $ 1.25 $ 1.10 $ 1.40 $ 1.22 $ 1.41 $ 1.23 $ 1.45 $ 1.26
==============================================================================================================================
Common Stock Information
Price Range: High $ 57 1/8 $ 60 5/8 $ 61 $ 56 3/4 $ 70 1/8 $ 56 1/2 $ 77 3/8 $ 52 1/2
Low 48 5/8 53 3/4 56 50 3/4 57 7/8 50 1/4 65 1/2 46 1/2
Dividend per share .39 .35 .39 .35 .39 .35 .39 .35
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
<F*>The effective tax rate reflects the impact of the nontax deductibility of the $58 million of goodwill related to the sale
of the Lycoming Turbine Engine division.
</TABLE>
T E X T R O N 51
<PAGE> 32
- -------------------------------------------------------------------------------
Five Year Summary
<TABLE>
<CAPTION>
(Dollars in millions except per share amounts) 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Sales $ 6,468 $ 6,678 $ 6,271 $ 5,616 $ 5,211
Interest, discount and service charges 1,565 1,333 1,260 1,273 1,184
Insurance premiums 1,412 1,233 1,137 1,094 1,073
Investment income (including net realized
investment gains) 528 439 410 365 372
- ----------------------------------------------------------------------------------------------------------------------------
Total revenues 9,973 9,683 9,078 8,348 7,840
- ----------------------------------------------------------------------------------------------------------------------------
Costs and expenses
Cost of sales 5,294 5,514 5,210 4,560 4,185
Selling and administrative 1,552 1,489 1,438 1,402 1,330
Interest 813 665 668 743 754
Provision for losses on collection of finance
receivables, less recoveries 169 162 153 160 135
Insurance benefits and increase in policy liabilities 1,195 992 850 824 812
Amortization of insurance policy acquisition costs 137 107 143 132 129
- ----------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 9,160 8,929 8,462 7,821 7,345
- ----------------------------------------------------------------------------------------------------------------------------
Income before income taxes 813 754 616 527 495
Income taxes (321) (308) (234) (203) (195)
Elimination of minority interest in net income
of Paul Revere (13) (13) (3) - -
- ----------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of changes in
accounting principles 479 433 379 324 300
Cumulative effect of changes in accounting
principles, net of income taxes - - - (679) -
- ----------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 479 $ 433 $ 379 $ (355) $ 300
============================================================================================================================
Per common share:
Income before cumulative effect of changes
in accounting principles $ 5.51 $ 4.80 $ 4.21 $ 3.66 $ 3.42
Cumulative effect of changes in accounting
principles - - - (7.67) -
- ----------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 5.51 $ 4.80 $ 4.21 $ (4.01) $ 3.42
============================================================================================================================
Dividends declared $ 1.56 $ 1.40 $ 1.24 $ 1.12 $ 1.03
============================================================================================================================
Average common shares outstanding 86,894,000 90,119,000 90,052,000 88,580,000 87,563,000
============================================================================================================================
Financial position at year-end
Total assets $23,172 $20,925 $19,658 $18,367 $15,737
Debt:
Textron Parent Company Borrowing Group $ 1,774 $ 1,582 $ 2,025 $ 2,283 $ 1,820
Finance and insurance subsidiaries $ 8,475 $ 7,782 $ 6,847 $ 6,440 $ 5,664
Shareholders' equity $ 3,412 $ 2,882 $ 2,780 $ 2,488 $ 2,928
Book value per common share $ 39.92 $ 33.45 $ 31.18 $ 28.11 $ 33.65
- ----------------------------------------------------------------------------------------------------------------------------
Other data
Capital expenditures $ 283 $ 302 $ 252 $ 217 $ 156
Depreciation $ 202 $ 212 $ 206 $ 199 $ 182
Common stock price range: High $ 77 3/8 $ 60 5/8 $ 58 7/8 $ 44 3/4 $ 39 1/2
Low $ 48 5/8 $ 46 1/2 $ 40 3/8 $ 33 3/4 $ 25
Number of common shareholders 26,000 27,000 28,000 30,000 31,000
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
52 T E X T R O N
- -------------------------------------------------------------------------------
Directory of Divisions
- -------------------------------------------------------------------------------
Aircraft
Bell Helicopter Textron
Webb F. Joiner, Chairman
P.O. Box 482
Fort Worth, TX 76101
(817) 280-2011
Helicopters and spare parts for the U.S. government, foreign governments
and commercial markets; tiltrotor aircraft development; aftermarket
sales of technical, training and logistics support services.
- -------------------------------------------------------------------------------
The Cessna Aircraft Company
Russell W. Meyer, Jr., Chairman and Chief Executive Officer
P.O. Box 7706
Wichita, KS 67277-7706
(316) 941-6000
Light and mid-size business jets and utility turboprop aircraft
supported worldwide through a network of company-owned Citation service
centers and authorized representatives.
- -------------------------------------------------------------------------------
Automotive
Textron Automotive Company
Headquarters
Derek Plummer, Chairman
Textron Automotive Trim Operations
750 Stephenson Highway
Troy, MI 48083
(810) 616-5100
Instrument panels, door panels, armrests, airbag doors, center consoles
and headliners for totally integrated vehicle interiors. Injection
molded and thermoplastic exterior ornamentation such as bumper covers,
body side moldings, claddings and lighting components for automotive
OEMs in North America and Europe.
- -------------------------------------------------------------------------------
CWC Castings Textron
John L. Kelly, President
1085 W. Sherman Blvd
Muskegon, MI 49441
(616) 733-1331
Gray iron and chilled iron castings, primarily camshafts, marketed
directly to automobile and engine manufacturers in North America and
Europe.
- -------------------------------------------------------------------------------
McCord Winn Textron
George F. Daniels, President
645 Harvey Road
Manchester, NH 03103
(603) 624-7300
Seating Comfort Systems, windshield washer systems, precision motors and
components marketed directly to automotive OEMs and suppliers worldwide.
- -------------------------------------------------------------------------------
Micromatic Textron
Michael J. Brennan, President
345 East 48th Street
Holland, MI 49423
(616) 392-1461
Proprietary machine tools, components and assembly systems designed and
manufactured for automotive, transportation and other commercial markets
worldwide.
- -------------------------------------------------------------------------------
Randall Textron
Jane L. Warner, President
750 Stephenson Highway
Troy, MI 48083
(810) 616-5100
Functional and decorative metal stampings, rollformed components, fuel
fillers, metal tubular products and synergistic assemblies for
automotive and non-automotive markets.
- -------------------------------------------------------------------------------
Industrial
Avdel Textron
John C. Castle, President
Mundells
Welwyn Garden City
Hertfordshire AL7 1QB, England
011-44-1707-328-161
Specialized engineered fastening and assembly systems, including
innovative hand-held and automatic assembly systems for global markets.
- -------------------------------------------------------------------------------
Camcar Textron
James R. MacGilvray, President
600-18th Avenue
Rockford, IL 61104-5181
(815) 961-5000
Cold-formed threaded and non-threaded metal fasteners and components, as well
as synergistic assemblies that combine fasteners, stampings and molded
plastics. Sold to automotive, appliance, business equipment, construction and
other OEM and distributor markets.
T E X T R O N 53
<PAGE> 34
- -------------------------------------------------------------------------------
Directory of Divisions
- -------------------------------------------------------------------------------
Industrial (continued)
Cherry Textron
George A. Andrews, President
P.O. Box 2157
Santa Ana, CA 92707-0157
(714) 545-5511
Proprietary blind rivet fastening systems, including hand-held and fully
automated installation systems for aerospace markets. Supported by
worldwide, engineering-oriented distribution system.
- -------------------------------------------------------------------------------
Cone Drive Textron
John G. Melvin, President
240 East Twelfth Street
Traverse City, MI 49685-0272
(616) 946-8410
Double enveloping worm gear speed reducers, gear motors and gear sets
sold directly from Cone Drive's manufacturing locations to the mining,
steel, aerospace, automotive, printing, packaging and brewing
industries.
- -------------------------------------------------------------------------------
E-Z-GO Textron
L.T. Walden, Jr., President
P.O. Box 388
Augusta, GA 30903-0388
(706) 798-4311
Electric- and gasoline-powered golf cars for fleet and individual
markets; multipurpose utility vehicles for the turf, industrial and
commercial markets.
- -------------------------------------------------------------------------------
Elco Textron
John C. Lutz, President and Chief Executive Officer
1111 Samuelson Road
P.O. Box 7009
Rockford, IL 61125-7009
(815) 397-5155
Cold-formed and stamped metal parts and components, injection-molded
thermoplastic parts, and synergistic assemblies that combine these
disciplines for the commercial and automotive OEM markets and the
commercial construction market; fasteners and related packaged products
to the do-it-yourself, consumer retail market.
- -------------------------------------------------------------------------------
Greenlee Textron
Barclay S. Olson, President
4455 Boeing Drive
Rockford, IL 61109
(815) 397-7070
Powered equipment, electrical test instruments and hand tools used for
the installation of electrical, communications, and security cabling
systems in residential, commercial and industrial facilities.
- -------------------------------------------------------------------------------
Jacobsen Textron
Philip J. Tralies, President
1721 Packard Avenue
Racine, WI 53403-2564
(414) 637-6711
Professional mowing and turf maintenance equipment for golf course and
commercial use including greens and fairway mowers, trim and rotary
mowers, aerators, work trucks and other powered turf maintenance
equipment.
- -------------------------------------------------------------------------------
Speidel Textron
William R. Jahnke, President
70 Ship Street
Providence, RI 02903
(401) 421-8600
Watch attachments made from metal, leather and plastic materials;
fashion jewelry products including identification bracelets, neckchains
and watches. Sold primarily by Speidel's direct sales force to retail
jewelers, department and drugstores and select mass merchandisers.
Designs and manufactures attachments for several watch companies.
- -------------------------------------------------------------------------------
Systems and Components
Fuel Systems Textron
Michael Boston, President
700 N. Centennial
Zeeland, MI 49464
(616) 772-9171
Fuel systems components for aircraft and industrial gas turbine engines
(OEM and aftermarket service), including main engine fuel injection
devices, fuel metering and distribution valves, and augmentor fuel
systems. Sold to the world's major engine builders, the U.S. government
and commercial airlines.
- -------------------------------------------------------------------------------
HR Textron
Bradley W. Spahr, President
25200 W. Rye Canyon Rd.
Valencia, CA 91355
(805) 294-6000
Sophisticated control systems for prime contractors and the U.S.
government for use in high-performance aircraft, helicopters, missiles,
space launch vehicles and turbine engines; servovalves; fuel and
pneumatic systems components; and automatic test equipment.
- -------------------------------------------------------------------------------
Textron Aerostructures
Dick Wells, President
P.O. Box 210
Nashville, TN 37202
(615) 361-2000
Aircraft wings and components for the business jet and regional commuter
markets as well as for the commercial and military transport markets; design
assistance to customers.
54 T E X T R O N
<PAGE> 35
- -------------------------------------------------------------------------------
Directory of Divisions
- -------------------------------------------------------------------------------
Systems and Components (continued)
Textron Lycoming
Philip R. Boob, President
652 Oliver Street
Williamsport, PA 17701
(717) 323-6181
Piston aircraft engines and replacement parts for the general aviation
market. Remanufacture and overhaul of Lycoming engines. Aftermarket
sales and service through a worldwide distribution network.
- -------------------------------------------------------------------------------
Textron Marine & Land Systems
John J. Kelly, President
6600 Plaza Drive
New Orleans, LA 70127
(504) 245-6600
Air cushion amphibious landing craft for the U.S. Navy and international
markets; a new class of motor lifeboat for the Coast Guard; Surface
Effect Ships and commercial air cushion vehicles; Cadillac Gage armored
combat vehicles, turrets, and advanced suspension systems for U.S. and
foreign customers.
- -------------------------------------------------------------------------------
Textron Systems
Richard J. Millman, President
201 Lowell Street
Wilmington, MA 01887
(508) 657-5111
"Smart" weapons development and production based on sensor fuzed
munitions technology; aircraft landing systems; surveillance systems;
infrared detectors; energy technology; special, high-performance
materials sold worldwide to aerospace, automotive, industrial and
sporting goods manufacturers, as well as major oil and chemical
processing companies.
- -------------------------------------------------------------------------------
Turbine Engine Components Textron
G.L. (Topper) Long, President
1211 Old Albany Road
Thomasville, GA 31792
(912) 228-2600
Gas turbine engine components including fan and compressor blades,
vanes, disks, hubs, diffusers, short shafts, impellers, integrally
bladed rotors, combustor housings, air collectors, frames, cases, and
forgings for engine manufacturers and the spare parts market.
- -------------------------------------------------------------------------------
Finance
Avco Financial Services
Warren R. Lyons, Chairman; Stephen J. Davis, Vice Chairman
Plaza Tower
600 Anton Blvd.
P.O. Box 5011
Costa Mesa, CA 92628-5011
(714) 435-1200
Consumer financing, both unsecured and secured by personal property,
through nearly 1,200 AFS loan offices in the United States, Australia,
Canada, New Zealand, Spain, the United Kingdom and Hong Kong; credit
life and disability insurance, collateral protection, involuntary
unemployment insurance, and credit property and property/casualty
insurance.
- -------------------------------------------------------------------------------
Textron Financial Corporation
Stephen A. Giliotti, President
40 Westminster Street
P.O. Box 6687
Providence, RI 02940-6687
(401) 621-4200
Broad spectrum of commercial lending products: equipment leasing and
lending, floorplanning, asset-based lending, receivables financing,
small business loans, and syndications. Aircraft, timeshare resorts, and
golf courses are among numerous industries served directly through 29
offices in the U.S., and indirectly through relationships with financial
intermediaries and Textron manufacturers and product dealers.
- -------------------------------------------------------------------------------
Paul Revere
The Paul Revere Corporation
Charles E. Soule, President and Chief Executive Officer
18 Chestnut Street
Worcester, MA 01608
(508) 799-4441
Individual non-cancellable and group long-term disability income
insurance products designed for professionals, corporate executives and
small business owners; group life and dental insurance; individual life
and annuities. Listed on NYSE (PRL).
T E X T R O N 55
<PAGE> 36
- -------------------------------------------------------------------------------
Board of Directors
James F. Hardymon <F1>
Chairman and Chief Executive Officer
Textron Inc.
Providence, RI
Lewis B. Campbell <F1>
President and Chief Operating Officer
Textron Inc.
Providence, RI
H. Jesse Arnelle <F4>,<F5>
Senior Partner
Arnelle, Hastie, McGee, Willis & Greene
San Francisco, CA
R. Stuart Dickson <F1>,<F2>,<F5>
Formerly Chairman
Ruddick Corporation (diversified holding company)
Charlotte, NC
Paul E. Gagne
President and Chief Executive Officer
Avenor Inc. (forest products firm)
Montreal, Quebec, Canada
B.F. Dolan <F1>,<F3>
Retired Chairman
Textron Inc.
Charlotte, NC
John D. Macomber <F1>,<F2>,<F3>
Principal
JDM Investment Group (private investment firm)
Washington, DC
Barbara Scott Preiskel <F3>,<F5>
Formerly Senior Vice President and General Counsel
Motion Picture Association
New York, NY
Brian H. Rowe
Retired Chairman
GE Aircraft Engines
Cincinnati, OH
Sam F. Segnar <F3>,<F4>
Retired Chairman and Chief Executive Officer
Enron Corporation (diversified natural gas company)
Houston, TX
Jean Head Sisco <F2>,<F4>
Partner
Sisco Associates (international trade consulting firm)
Washington, DC
John W. Snow <F1>,<F4>
Chairman, President and Chief Executive Officer
CSX Corporation (diversified transportation company)
Richmond, VA
Martin D. Walker <F1>,<F4>
Chairman and Chief Executive Officer
M.A. Hanna Company (an international specialty chemicals company)
Cleveland, OH
Thomas B. Wheeler <F2>,<F5>
President and Chief Executive Officer
Massachusetts Mutual Life Insurance Company
Springfield, MA
Numbers indicate committee memberships
[FN]
<F1> Executive Committee: Chairman, James F. Hardymon
<F2> Audit Committee: Chairman, Jean Head Sisco
<F3> Nominating Committee: Chairman, Barbara Scott Preiskel
<F4> Organization and Compensation Committee: Chairman, Martin D. Walker
<F5> Pension Committee: Chairman, Thomas B. Wheeler
- -------------------------------------------------------------------------------
Management Committee
James F. Hardymon<F*>
Chairman and Chief Executive Officer
Lewis B. Campbell
President and Chief Operating Officer
Mary L. Howell<F**>
Executive Vice President Government and International
Wayne W. Juchatz
Executive Vice President and General Counsel
Stephen L. Key
Executive Vice President and Chief Financial Officer
William F. Wayland<F**>
Executive Vice President Administration and Chief Human Resources Officer
- -------------------------------------------------------------------------------
Operating Committee
Lewis B. Campbell
President and Chief Operating Officer
Carl D. Burtner<F**>
Vice President Human Resources
Herbert L. Henkel<F*>
President
Textron Industrial Products
Webb F. Joiner<F***>
Chairman
Bell Helicopter Textron
Warren R. Lyons<F**>
Chairman
Avco Financial Services
Harold K. McCard<F***>
Senior Vice President Operations
Russell W. Meyer, Jr.<F***>
Chairman and Chief Executive Officer
Cessna Aircraft Company
Gero Meyersiek
Vice President International
Derek Plummer<F***>
Chairman
Textron Automotive Company
Charles E. Soule<F***>
President and Chief Executive Officer
The Paul Revere Corporation
Terry D. Stinson
President
Textron Aerospace Systems and Components
Richard L. Yates<F**>
Vice President and Controller
- -------------------------------------------------------------------------------
Corporate Staff Officers
Peter B.S. Ellis
Vice President Strategic Planning
Douglas A. Fahlbeck<F**>
Vice President Mergers and Acquisitions
Arnold M. Friedman<F***>
Vice President and Deputy General Counsel
William B. Gauld
Vice President Corporate Information Management and Chief Information Officer
Gregory E. Hudson<F*>
Vice President Taxes
William P. Janovitz<F**>
Vice President Financial Reporting
Mary F. Lovejoy
Vice President Investor Relations
Frank W. McNally<F*>
Vice President Employee Relations and Benefits
Richard A. McWhirter<F***>
Executive Vice President and Corporate Secretary
Daniel L. Shaffer<F**>
Vice President Audit and Business Ethics
Richard F. Smith<F**>
Vice President Government Affairs
Richard A. Watson<F***>
Senior Vice President and Treasurer
John F. Zugschwert
Vice President Government Marketing
Service with Textron and its subsidiaries/
divisions:
[FN]
<F*>5 - 9 years
<F**>10 - 19 years
<F***>20 years and over
56 T E X T R O N
<PAGE> 37
- -------------------------------------------------------------------------------
Shareholder Information
Annual Meeting To Be Held April 24 in Rockford, Illinois
The annual meeting of Textron shareholders will be held at 10:30 a.m. on
Wednesday, April 24, 1996, at The Clock Tower Resort and Conference Center,
7801 E. State Street, Rockford, IL 61125. Shareholders are encouraged to
attend.
About Your Securities and Records
The common stock of Textron Inc. is listed on the New York, Chicago and Pacific
Stock Exchanges and quoted in the daily stock table carried by most newspapers.
The ticker symbol for Textron is TXT. Textron's preferred stocks are traded
only on the New York Stock Exchange.
First Chicago Trust Company of New York, 14 Wall Street, Suite 4680, New
York, New York 10005, acts as transfer agent, registrar and dividend paying
agent for Textron stock and maintains all shareholder records for the
corporation. First Chicago also acts as conversion agent for Textron's $2.08
preferred stock and its $1.40 preferred dividend stock.
Shareholders may obtain information relating to their share position,
dividends, transfer requirements, lost certificates, conversion rights,
dividend reinvestment accounts and other related matters by telephoning
First Chicago Trust Company of New York's "Telephone Response Center"
and speak to a customer service representative at (201) 324-1225.
Shareholders must provide their tax identification number, the name(s)
in which their shares are registered and their record address when they
request information. This service is available to all shareholders
Monday through Friday 9:00 a.m. to 5:00 p.m. Eastern Time. Shareholders
also may obtain this and other information about their holdings by
writing to First Chicago Trust Company of New York at P.O. Box 2500,
Jersey City, New Jersey 07303-2500.
Dividend Payments Mailed Quarterly
Quarterly dividends are mailed with the intent of reaching shareholders
of common and preferred stock on the first business day of January,
April, July and October. Postal delays may cause actual receipt dates to
vary.
Free Automatic Dividend Reinvestment
Textron's Shareholder Investment Service offers common shareholders of
record a convenient way to purchase additional shares of Textron common
stock without paying brokerage, commission or other service fees.
Participants in the plan may choose to have all or part of their
dividends automatically reinvested, to make additional cash payments or
to do both in purchasing shares of Textron common stock. Brokerage
expenses for these purchases are paid by Textron. Personal recordkeeping
is simplified by an account statement that is mailed to participants.
More information and an authorization form may be obtained by writing to
First Chicago Trust Company of New York, P.O. Box 2500, Jersey City, New Jersey
07303-2500 or by calling (201) 324-1225.
Shareholder Information and Investor Relations Inquiries
Questions regarding Textron, investor relations matters or requests for
financial information should be directed to the Corporate Communications
Department, Textron Inc., 40 Westminster Street, Providence, Rhode
Island 02903 or by calling (401) 457-6050.
For more information regarding Textron and its divisions, visit our
worldwide web site on the Internet at http://www.textron.com
Form 10-K Available
After April 1, 1996, shareholders may, without charge, obtain copies of
Textron's Form 10-K annual report filed with the Securities and Exchange
Commission. Requests for this report should also be addressed to Textron's
Corporate Communications Department.
This annual report is printed on recycled paper.
TEXTRON INC. - SIGNIFICANT SUBSIDIARIES
(as of December 30, 1995)
Set forth below are the names of certain subsidiaries of
Textron Inc. Other subsidiaries which, considered in the aggregate, do
not constitute a significant subsidiary are omitted from such list.
Name of Subsidiary Place of Incorporation
Avco Corporation Delaware
ARS Two Inc. Delaware
Avco Community Developers, Inc. California
Textron Pacific Limited Australia
Avco Financial Services, Inc. (1) Delaware
Bell Helicopter Services Inc. Delaware
Bell Helicopter Asia (Pte) Limited Singapore
Bell Helicopter Textron Inc. Delaware
Cadillac Gage Textron Inc. Michigan
Cessna Aircraft Company, The Kansas
Cone Drive Operations Inc. Delaware
Elco Textron Inc. Delaware
Fuel Systems Textron Inc. Delaware
Greenlee Textron Inc. Delaware
HR Textron Inc. Delaware
McCord Corporation Michigan
Textron Automotive Interiors Inc. Delaware
Davidson Overseas Investment Inc. Delaware
Davidson Marley B.V. (2) Netherlands
Textron Automotive Functional Components Inc.
- McCord Winn Division Massachusetts
Micromatic Operations Inc. Delaware
Micro-Precision Operations Inc. Delaware
The Paul Revere Corporation (3) Massachusetts
The Paul Revere Life Insurance Company Massachusetts
The Paul Revere Protective Life Insurance Company Delaware
The Paul Revere Variable Annuity InsuranceCompany Massachusetts
The Paul Revere Equity Sales Company Massachusetts
The Paul Revere Investment ManagementCompany Massachusetts
_______________
(1) See page 3 hereof for details of subsidiaries of Avco
Financial
Services, Inc.
(2) 50% owned by Davidson Overseas Investment Inc.
(3) The Paul Revere Corporation is 83% owned by Textron Inc. and
17%
publicly owned.
<PAGE>
Name of Subsidiary Place of Incorporation
Textron Atlantic Inc. Delaware
Avdel plc England
Bell Helicopter Supply Center B.V. Netherlands
Marly ORAG S.A. France
ORAG Italia S.R.L. Italy
ORAG Scandinavia A/S Denmark
ORAG Textron A.G. Switzerland
Textron Atlantic Belgium S.A. Belgium
Textron Atlantic GmbH Germany
ORAG Deutschland GmbH Germany
Freidr. Boesner GmbH (4) Germany
Textron Limited United Kingdom
Textron Automotive Exteriors Inc. Delaware
Textron Financial Corporation Delaware
Cessna Finance Corporation Kansas
Textron FSC Inc. Barbados
Textron Properties Inc. Delaware
Textron Canada Limited (5) Canada
Textron Realty Corporation Delaware
Textron Realty Operations (Wheatfield) Inc. Delaware
Textron S.A. de C.V. Mexico
Textron Automotive Company de Mexico, S.A. de C.V. Mexico
Turbine Engine Components Textron Inc. Delaware
Turbine Engine Components Textron (Danville
and Thomasville Operations) Inc. Delaware
Turbine Engine Components Textron (Cleveland Operations)
Inc. Delaware
Turbine Engine Components Textron (Danvers Operations)
Inc. Massachusetts
Turbine Engine Components Textron (Newington Operations)
Inc. Connecticut
Turbine Engine Components Textron (Santa Fe Springs
Operations) Inc. California
Wolverine Metal Specialties, Inc. Michigan
______________
(4) 99% of the capital stock of Freidr. Boesner GmbH is owned by
ORAG
Deutschland GmbH, and the remaining 1% is owned by Textron
Atlantic Holdings Inc.
(5) 64.5% of the capital stock of Textron Canada Limited is held
by
Textron Properties Inc. and the remaining 35.5% by Textron
Inc.
<PAGE>
Name of Subsidiary Place of Incorporation
AFS Corporation (1) Delaware
Avco DC Corporation (1) Delaware
Avco Enterprises, Inc. (3) California
Avco Financial Services Canada Limited (2) Ontario
Avco Financial Services International, Inc. (3) Nebraska
Avco Financial Services Ltd. (1) Australian Capital
Territory
Avco Financial Services Limited (3) New Zealand
Avco Group Limited (1) United Kingdom
Avco National Bank (4) California
Balboa Insurance Company (1) California
Balboa Life Insurance Company (3) California
Family Insurance Corporation (3) Wisconsin
Meritplan Insurance Company (5) California
Newport Insurance Company (5) Arizona
_________________
(1) Owned by Avco Financial Services International, Inc.
(2) Owned by AFS Corporation and Avco DC Corporation
(3) Owned by Avco Financial Services, Inc.
(4) Owned by Avco Enterprises, Inc.
(5) Owned by Balboa Insurance Company
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual
Report (Form 10-K) of Textron Inc. of our report dated January
25, 1996, included in the 1995 Annual Report to Shareholders of
Textron Inc.
Our audits also included the financial statement schedules of
Textron Inc. listed in the accompanying Index to Financial
Statements and Financial Statement Schedules. These schedules
are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In
our opinion, the financial statement schedules referred to above,
when considered in relation to the basic financial statements
taken as a whole, present fairly in all material respects the
information set forth therein.
We also consent to the incorporation by reference in the
Registration Statements (Form S-3 No. 33-46501, Form S-3 No. 33-
63227, Form S-8 No. 2-78073, Form S-8 No. 2-95413, Form S-8 No.
33-00668, Form S-8 No. 33-19402, Form S-8 No. 33-37139, Form S-8
No. 33-38094, Form S-8 No. 33-57025 and Form S-8 No. 33-63741) of
Textron Inc. and in the related Prospectuses and Prospectus
Supplements of our report dated January 25, 1996, with respect to
the consolidated financial statements and schedules of Textron
Inc. included or incorporated by reference in this Annual Report
(Form 10-K) for the year ended December 30, 1995.
/s/ Ernst & Young LLP
New York, New York
March 11, 1996
POWER OF ATTORNEY
The undersigned, Textron Inc. ("Textron") a Delaware
corporation, and the undersigned directors and officers of
Textron, do hereby constitute and appoint Wayne W. Juchatz, Arnold
M. Friedman, Michael D. Cahn and Ann T. Willaman, and each of
them, with full powers of substitution, their true and lawful
attorneys and agents to do or cause to be done any and all acts
and things and to execute and deliver any and all instruments and
documents which said attorneys and agents, or any of them, may
deem necessary or advisable in order to enable Textron to comply
with the Securities and Exchange Act of 1934, as amended, and any
requirements of the Securities and Exchange Commission in respect
thereof, in connection with the filing of Textron's Annual Report
on Form 10-K for the fiscal year ended December 30, 1995,
including specifically, but without limitation, power and
authority to sign the names of the undersigned directors and
officers in the capacities indicated below and to sign the names
of such officers on behalf of Textron to such Annual Report filed
with the Securities and Exchange Commission, to any and all
amendments to such Annual Report, to any instruments or documents
or other writings in which the original or copies thereof are to
be filed as a part of or in connection with such Annual Report or
amendments thereto, and to file or cause to be filed the same with
the Securities and Exchange Commission; and each of the
undersigned hereby ratifies and confirms all that such attorneys
and agents, and each of them, shall do or cause to be done
hereunder and such attorneys and agents, and each of them, shall
have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, Textron has caused this Power of Attorney
to be executed and delivered in its name and on its behalf by the
undersigned duly authorized officer and its corporate seal
affixed, and each of the undersigned has signed his or her name
thereto, on this 28th day of February, 1995.
TEXTRON INC.
By /s/James F. Hardymon
James F. Hardymon
Chairman and Chief
Executive Officer
ATTEST:
/s/Richard A. McWhirter
Richard A. McWhirter
Executive Vice President and
Corporate Secretary
/s/James F. Hardymon /s/Barbara Scott Preiskel
James F. Hardymon Barbara Scott Preiskel
Chairman and Chief Director
Executive Officer, Director
(principal executive officer)
/s/Lewis B. Campbell /s/ Brian H. Rowe
Lewis B. Campbell Brian H. Rowe
President and Chief Operating Director
Officer, Director
/s/H. Jesse Arnelle /s/ Sam F. Segnar
H. Jesse Arnelle Sam F. Segnar
Director Director
/s/R. Stuart Dickson /s/ Jean Head Sisco
R. Stuart Dickson Jean Head Sisco
Director Director
/s/B.F. Dolan /s/John W. Snow
B.F. Dolan John W. Snow
Director Director
/s/Paul E. Gagne /s/Martin D. Walker
Paul E. Gagne Martin D. Walker
Director Director
/s/John D. Macomber /s/Thomas B. Wheeler
John D. Macomber Thomas B. Wheeler
Director Director
/s/Stephen L. Key
Stephen L. Key
Executive Vice President
and Chief Financial Officer
(principal financial officer)
/s/Richard L. Yates
Richard L. Yates
Vice President and Controller
(principal accounting officer)
Exhibit 24.2
TEXTRON INC.
Assistant Secretary's Certificate
I, ANN T. WILLAMAN, a duly elected Assistant Secretary of
TEXTRON INC., a Delaware corporation (hereinafter, the
"Corporation"), DO HEREBY CERTIFY that set forth below is a true
and correct copy of a resolution passed at a meeting of the
Corporation's Board of Directors held on February 28, 1996, at
which a quorum was present and voted throughout:
RESOLVED, that the officers of the Corporation be,
and they hereby are, authorized in the name and on
behalf of the Corporation to execute and deliver a power
of attorney appointing Wayne W. Juchatz, Arnold M.
Friedman, Michael D. Cahn and Ann T. Willaman, or any of
them, to act as attorneys-in-fact for the Corporation
for the purpose of executing and filing the
Corporation's Annual Report on Form 10-K for its fiscal
year ended December 30, 1995, and any and all amendments
thereto.
I DO HEREBY FURTHER CERTIFY that the foregoing resolution has
been neither amended nor modified, and remains in full force and
effect as of the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and caused
the Corporate seal of TEXTRON INC. to be affixed as of the 13th
day of March, 1996.
/s/Ann T. Willaman
CORPORATE SEAL Assistant Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Textron Inc.'s Consolidated Balance Sheet as of December
30, 1995 and Consolidated Statement of Income for the year
ended December 30, 1995 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> DEC-30-1995
<CASH> 99
<SECURITIES> 0
<RECEIVABLES> 10,671
<ALLOWANCES> 270
<INVENTORY> 1,284
<CURRENT-ASSETS> 0
<PP&E> 3,060
<DEPRECIATION> 1,652
<TOTAL-ASSETS> 23,172
<CURRENT-LIABILITIES> 0
<BONDS> 10,249
<COMMON> 12
0
15
<OTHER-SE> 3,385
<TOTAL-LIABILITY-AND-EQUITY> 23,172
<SALES> 6,468
<TOTAL-REVENUES> 9,973
<CGS> 5,294
<TOTAL-COSTS> 6,626
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 169
<INTEREST-EXPENSE> 813
<INCOME-PRETAX> 813
<INCOME-TAX> 321
<INCOME-CONTINUING> 479
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 479
<EPS-PRIMARY> 5.51
<EPS-DILUTED> 5.51
</TABLE>
