SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ____________
Commission file number 001-5480
A. Full title of the plan and the address of the plan, if different for
that the issuer named below:
EMPLOYEES' RETIREMENT SAVINGS PLAN
FOR PRECISION STAMPING DIVISION OF
ELCO TEXTRON INC.
1111 Samuelson Road
P.O. Box 7009
Rockford, Illinois 61125
B. Name of issuer of securities held pursuant to the plan and address of
Its principal executive office:
TEXTRON INC.
40 Westminster Street
Providence, Rhode Island 02903
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
EMPLOYEES' RETIREMENT SAVINGS PLAN
FOR PRECISION STAMPING DIVISION OF
ELCO TEXTRON INC.
ELCO TEXTRON INC., Plan Administrator
DATE: June 28, 1999 By: /s/Mark S. Arnold
Mark S. Arnold
Director of Finance
Financial Statements
and Supplemental Schedules
Employees' Retirement Savings Plan
for the Precision Stamping Division
of Elco Textron Inc.
Years ended December 31, 1998 and 1997
Employees' Retirement Savings Plan
for the Precision Stamping Division of
Elco Textron Inc.
Financial Statements
and Supplemental Schedules
Years ended December 31, 1998 and 1997
Contents
Report of Independent Auditors 1
Financial Statements
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 4
Notes to Financial Statements 6
Supplemental Schedules
Line 27a - Schedule of Assets Held for Investment Purposes 11
Line 27d - Schedule of Reportable Transactions 12
Report of Independent Auditors
Administrative Committee
Employees' Retirement Savings Plan for the Precision
Stamping Division of Elco Textron Inc.
We have audited the accompanying statements of net assets available for benefits
of the Employees' Retirement Savings Plan for the Precision Stamping Division of
Elco Textron Inc. as of December 31, 1998 and 1997, and the related statements
of changes in net assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plan'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 net assets available for benefits of the Plan at
December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1998, and reportable
transactions for the year then ended, are presented for purpose of additional
analysis and are not a required part of the financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The Fund Information in the statements of net assets
available for benefits and the statements of changes in net assets available for
benefits is presented for purpose of additional analysis rather than to present
the net assets available for benefits and changes in net assets available for
benefits of each fund. The supplemental schedules and Fund Information have been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
May 5, 1999
<PAGE>1
<TABLE>
Employees' Retirement Savings Plan
for the Precision Stamping Division of
Elco Textron Inc.
Statement of Net Assets Available for Benefits with Fund Information
December 31, 1998
<CAPTION>
Fund Information
Money High Small Textron
Market Bond Income Capitalization Balanced Stock Loan
Fund Fund Equity Fund Fund Fund Fund Total
Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair
value:
Pegasus Money Market
Fund $636,885 $ - $ - $ - $ - $ - $ - $ 636,885
Pegasus Bond Fund - 5,691 - - - - - 5,691
Putnam Voyager Fund - - - 1,971,150 - - - 1,971,150
Pegasus Equity Index
Fund - - 2,297,028 - - - - 2,297,028
The George Putnam Fund
of Boston - - - - 1,359,075 - - 1,359,075
Textron Inc. common
stock - - - - - 1,127,621 - 1,127,621
Participant notes
receivable - - - - - - 176,339 176,339
Total investments 636,885 5,691 2,297,028 1,971,150 1,359,075 1,127,621 176,339 7,573,789
Receivables:
Participant
contributions 2,829 47 13,731 13,745 8,487 8,221 - 47,060
Employer's
contributions 516 11 2,195 2,193 1,508 1,314 - 7,737
Total receivables 3,345 58 15,926 15,938 9,995 9,535 - 54,797
Net assets available
for benefits $640,230 $5,749 $2,312,954 $1,987,088 $1,369,070 $1,137,156 $176,339 $7,628,586
</TABLE>
See accompanying notes.
<PAGE>2
<TABLE>
Employees' Retirement Savings Plan
for the Precision Stamping Division of
Elco Textron Inc.
Statement of Net Assets Available for Benefits With Fund Information
December 31, 1997
<CAPTION>
Fund Information
Money High Small Textron
Main Market Income Capitalization Balanced Stock Loan
Fund Fund Equity Fund Fund Fund Fund Total
Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair value:
Parkstone Prime Obligation
Money Market Fund $137 $659,902 $ 112 $ 195 $ 7,464 $ 42,612 $ - $ 710,422
Parkstone High Income
Equity Fund - - 1,761,879 - - - - 1,761,879
Parkstone Mid
Capitalization Fund - - 23,923 - - - - 23,923
Parkstone Small
Capitalization Fund - - - 1,879,144 - - - 1,879,144
Parkstone Balanced Fund - - - - 1,054,342 - - 1,054,342
Textron Inc. common stock - - - - - 705,625 - 705,625
Participant notes receivable - - - - - - 80,955 80,955
Total investments 137 659,902 1,785,914 1,879,339 1,061,806 748,237 80,955 6,216,290
Receivables:
Participant contributions - 2,944 13,878 16,613 8,389 7,614 - 49,438
Employer's contributions - 14,841 28,538 34,060 21,644 16,330 - 115,413
Other receivable (payable) - (1,617) (2,654) (2,734) (1,814) 374 - (8,445)
Accrued income 570 2,888 2 2 9 2,994 - 6,465
Total receivables 570 19,056 39,764 47,941 28,228 27,312 - 162,871
Due (to) from other funds (707) 3,185 (1,402) (822) (1,046) 783 9 -
Net assets available for
benefits $ - $682,143 $1,824,276 $1,926,458 $1,088,988 $776,332 $80,964 $6,379,161
</TABLE>
See accompanying notes.
<PAGE>3
<TABLE>
Employees' Retirement Savings Plan
for the Precision Stamping Division of
Elco Textron Inc.
Statement of Changes in Net Assets Available for Benefits with Fund Information
Year ended December 31, 1998
<CAPTION>
Fund Information
Money High Small Textron
Market Bond Income Capitalization Balanced Stock Loan
Fund Fund Equity Fund Fund Fund Fund Total
Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net appreciation (depreciation) in
fair value of investments $ - $ 21 $248,858 $(106,549) $32,220 $190,040 $ - $364,590
Interest and dividend income 34,008 - 151,894 132,370 116,125 11,867 6,777 453,041
34,008 21 400,752 25,821 148,345 201,907 6,777 817,631
Contributions:
Participant 29,678 47 143,514 149,391 85,666 90,106 - 498,402
Employer 5,336 11 22,751 23,375 15,554 13,875 - 80,902
35,014 58 166,265 172,766 101,220 103,981 - 579,304
Total additions 69,022 79 567,017 198,587 249,565 305,888 6,777 1,396,935
Deductions from net assets attributed
to:
Benefits paid to participants 46,309 - 40,218 42,095 19,418 146 - 148,186
Administrative expenses 196 - 196 196 196 647 - 1,431
Other (1,729) - (3,351) (4,967) (2,100) 10,030 10 (2,107)
Net deductions 44,776 - 37,063 37,324 17,514 10,823 10 147,510
Net increase prior to interfund
transfers 24,246 79 529,954 161,263 232,051 295,065 6,767 1,249,425
Interfund transfers (net) (66,159) 5,670 (41,276) (100,633) 48,031 65,759 88,608 -
Net increase (decrease) (41,913) 5,749 488,678 60,630 280,082 360,824 95,375 1,249,425
Net assets available for benefits,
beginning of year 682,143 - 1,824,276 1,926,458 1,088,988 776,332 80,964 6,379,161
Net assets available for benefits,
end of year $640,230 $5,749 $2,312,954 $1,987,088 $1,369,070 $1,137,156 $176,339 $7,628,586
</TABLE>
See accompanying notes.
<PAGE>4
<TABLE>
Employees' Retirement Savings Plan
for the Precision Stamping Division of
Elco Textron Inc.
Statement of Changes in Net Assets Available for Benefits with Fund Information
Year ended December 31, 1997
<CAPTION>
Fund Information
Money High Small Textron
Market Income Capitalization Balanced Stock Loan
Additions to net assets attributed to: Fund Equity Fund Fund Fund Fund Total
Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation) in
fair value of investments $ - $25,963 $(162,454) $55,606 $125,250 $ - $44,365
Interest and dividend income 41,698 298,698 89,173 56,299 11,600 7,312 504,780
41,698 324,661 (73,281) 111,905 136,850 7,312 549,145
Contributions:
Participant 46,514 146,270 188,542 94,126 75,687 - 551,139
Employer 22,805 49,511 59,529 37,401 27,070 - 196,316
69,319 195,781 248,071 131,527 102,757 - 747,455
Total additions 111,017 520,442 174,790 243,432 239,607 7,312 1,296,600
Deductions from net assets attributed to:
Benefit paid to participants 150,139 9,578 3,649 40,524 467 - 204,357
Administrative expenses 264 262 262 262 871 - 1,921
Other 1,958 1,962 2,536 1,388 687 7,856 16,387
Total deductions 152,361 11,802 6,447 42,174 2,025 7,856 222,665
Net increase (decrease) prior to
interfund transfers (41,344) 508,640 168,343 201,258 237,582 (544) 1,073,935
Interfund transfers (net) (324,631) 69,719 147,601 5,547 102,908 (1,144) -
Net increase (decrease) (365,975) 578,359 315,944 206,805 340,490 (1,688) 1,073,935
Net assets available for benefits,
beginning of year 1,048,118 1,245,917 1,610,514 882,183 435,842 82,652 5,305,226
Net assets available for benefits,
end of year $682,143 $1,824,276 $1,926,458 $1,088,988 $776,332 $80,964 $6,379,161
</TABLE>
See accompanying notes.
<PAGE>5
Employees' Retirement Savings Plan
for the Precision Stamping Division of
Elco Textron Inc.
Notes to Financial Statements
Year ended December 31, 1998
1. Description of the Plan
The following brief description of the Employees' Retirement Savings Plan for
the Precision Stamping Division of Elco Textron Inc. (the Plan) is provided for
general information purposes only. Participants should refer to the Summary Plan
Description for more complete information.
General
The Plan is a defined contribution plan formed to provide a retirement savings
plan to employees of the Precision Stamping Division of Elco Textron Inc.
(Elco). The Plan provides for participant tax-deferred savings under Section
401(k) of the Internal Revenue (IRC) and is subject to the provisions of the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974 (ERISA). The Plan is
administered by an administrative committee consisting of not fewer than three
members selected by the Board of Directors of Elco.
Eligibility
All employees of the Precision Stamping Division of Elco (the Plan Sponsor) are
eligible to participate in the Plan after completing one year of service, as
defined in the Plan.
Vesting and Forfeitures
Participants are immediately vested in the value of their contributions and
related allocation of trust income or loss.
Participants become fully vested in the value of contributions made by Elco and
related allocations of trust income or loss after five years of credited
service.
Any forfeitures are allocated to remaining Plan participants.
<PAGE>6
Contributions
Active participants may contribute up to 14% of their pre-tax compensation, as
defined by the Plan, subject to dollar limitations of $10,000 and $9,500 in 1998
and 1997, respectively.
The Plan provides for an employer matching contribution of 25% of a
participant's contribution, not to exceed 1% of the participant's compensation.
The Plan also provides for discretionary Company contributions. Elco made a
discretionary contribution of $-0- and $107,500 in 1998 and 1997, respectively.
Investment Options
Participants are allowed to direct the employer and employee contributions in
10% increments in any of the following investment funds:
Money Market Fund - Funds are invested in the Pegasus Money Market Fund, a
mutual fund, which invests in short-term U.S. Treasury bills or notes as well
as other short-term obligations issued by or guaranteed by the U.S.
Government and other short-term obligations.
Bond Fund - Funds are invested in the Pegasus Bond Fund, a mutual fund, which
invests in fixed income of corporate or U.S. Government obligations of
varying maturities.
High Income Equity Fund - Funds are invested in the Pegasus Equity Index
Fund, a mutual fund, which invests in common and preferred stocks.
Small Capitalization Fund - Funds are invested in the Putnam Voyager Fund, a
mutual fund, which invests in common and preferred stocks.
Balanced Fund - Funds are invested in The George Putnam Fund of Boston, a
mutual fund, which invests in a combination of common stocks (and securities
convertible into common stocks) and fixed income securities.
<PAGE>7
Textron Stock Fund - Funds are invested exclusively in Textron Inc. common
stock.
Participants may change their investment options quarterly.
During October 1998, the underlying investments available to participants
changed.
Allocations
The Plan document provides for daily allocation of trust income or loss which is
made in the same ratio that a participant's account bears to the sum of the
balances of all participants' accounts, taking into consideration the dates on
which additional contributions are made. Company contributions are allocated as
of the end of each plan year.
Distribution of Benefits
Distribution of the vested value of a participant's account is made by the
trustee within sixty (60) days after the end of the Plan year in which occurs a
participants' normal retirement date, early retirement date, late retirement
date, disability retirement date, severance date or death.
The vested value of such distribution includes any pre-tax contributions made to
the participant's account during the Plan year and is determined subsequent to
the inclusion of his allocable share of trust income or loss.
Participant Notes Receivable
Participants may borrow an amount that does not exceed the lesser of $50,000 or
50% of the employee's own contributions. Loans must be repaid within five years
and bear interest at the current prime rate plus 1%.
<PAGE>8
2. Summary of Significant Accounting Policies
Investment Valuation
The Plan's investments are stated at fair value. The shares of the registered
investment companies are valued at quoted market prices which represent the net
asset values of the shares held by the Plan at year end. Shares of Textron Inc.
common stock are valued at the last reported sale price on the last day of
business of the Plan year. Participant loans are valued at their outstanding
balances, which approximates fair value.
Use of Estimates
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 the financial statements and accompanying notes.
Actual results could differ from those estimates.
Administrative Expenses
Certain services are provided to the Plan by Elco without charge.
3. Termination Priorities
Although it has not expressed any intent to do so, Elco has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA. In the event of termination, participants
become 100% vested in their accounts.
4. Related-Party Transactions
During the year, the Plan had purchase and sale transactions with mutual funds
administered by an affiliate of the Plan's trustee and the common stock of
Textron Inc., parent company of Elco.
<PAGE>9
5. Income Tax Status
The Internal Revenue Service ruled on April 6, 1995, that the Plan qualifies
under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the
related trust is not subject to tax under present income tax law. Once
qualified, the Plan is required to operate in conformity with the IRC to
maintain its qualification. The plan administrator is not aware of any course of
action or series of events that have occurred that might adversely affect the
Plan's qualified status.
6. Year 2000 (Unaudited)
The Plan Sponsor has determined that it will be necessary to take certain steps
in order to ensure that the Plan's information systems are prepared to handle
the Year 2000 dates. The Plan Sponsor is taking a two-phase approach. The first
phase addresses internal systems that must be modified or replaced to function
properly. Both internal and external resources are being utilized to replace or
modify existing software applications, and test the software and equipment for
the Year 2000 modifications. The Plan Sponsor anticipates substantially
completing this phase of the project by July 1999. Costs associated with
modifying software and equipment are not estimated to be significant and will be
paid by the Plan Sponsor.
For the second phase of the project, Plan management established formal
communications with its third-party service providers to determine that they
have developed plans to address their own Year 2000 problems as they relate to
the Plan's operations. All third-party service providers have indicated that
they will be Year 2000 compliant by mid-1999. If modification of data processing
systems of either the Plan, the Plan Sponsor, or its service providers is not
completed on time, the Year 2000 problem could have a material impact on the
operations of the Plan. Plan management has not developed a contingency plan,
because they are confident that all systems will be Year 2000 ready.
<PAGE>10
Supplemental Schedules
<TABLE>
Employees' Retirement Savings Plan
for the Precision Stamping Division of
Elco Textron Inc.
Employer Identification Number 36-1033080
Plan Number 012
Line 27(a) - Schedule of Assets Held for Investment Purposes
December 31, 1998
<CAPTION>
Number
of Shares
Identity of or Face Current
Party Involved Amount Cost Value
<S> <C> <C> <C>
Pegasus Money Market Fund* 636,885 $636,885 $636,885
Mutual funds:
Pegasus Bond Fund* 527 5,670 5,691
Pegasus Equity Index Fund* 90,469 1,975,253 2,297,028
Putnam Voyager Fund* 89,924 1,623,273 1,971,150
The George Putnam Fund of Boston* 75,326 1,328,677 1,359,075
Textron Inc. common stock* 14,849 817,781 1,127,621
Participant loans 7.5%to9.5%
- 176,339
$6,387,539 $7,573,789
</TABLE>
* Indicates a party-in-interest to the Plan.
<PAGE>11
<TABLE>
Employees' Retirement Savings Plan
for the Precision Stamping Division of
Elco Textron Inc.
Employer Identification Number 36-1033080
Plan Number 012
Line 27(d) - Schedule of Reportable Transactions (continued)
Year ended December 31, 1998
<CAPTION>
Current
Value
of Asset on Net
Purchase Selling Cost of Transaction Gain
Identity of Party Description of Assets Price Price Asset Date (Loss)
Involved
Category (i) - Individual transactions in excess of 5 percent of plan assets
<S> <C> <C> <C> <C> <C> <C>
First of America Parkstone Prime Obligation Money $ - $618,385 $618,385 $618,385 $ -
Investment Market Fund
Corporation*
First of America Parkstone High Income Equity Fund - 1,778,069 1,806,075 1,778,069 (28,006)
Investment
Corporation*
First of America Parkstone Small Capitalization Fund - 1,449,764 1,992,120 1,449,764 (542,356)
Investment
Corporation*
First of America Parkstone Balanced Fund - 1,214,665 1,195,272 1,214,665 19,393
Investment
Corporation*
Putnam* Putnam Voyager Fund 1,451,118 - 1,451,118 1,451,118 -
Putnam* The George Putnam Fund of Boston 1,215,322 - 1,215,322 1,215,322 -
Putnam* Pegasus Equity Index Fund 1,801,190 - 1,801,190 1,801,190 -
Putnam* Pegasus Money Market Fund 620,996 - 620,996 620,996 -
Category (iii) - Series of security transactions in excess of 5 percent of plan assets
First of America Parkstone Prime Obligation Money 1,448,113 - 1,448,113 1,448,113 -
Investment Market Fund
Corporation*
- 2,158,535 2,158,535 2,158,535 -
First of America Parkstone High Income Equity Fund 245,079 - 245,079 245,079 -
Investment
Corporation*
- 1,936,129 1,959,710 1,936,129 23,581
First of America Parkstone Small Capitalization Fund 220,547 - $220,547 220,547 -
Investment
Corporation*
- 1,645,139 2,220,903 1,645,139 (575,764)
First of America Parkstone Balanced Fund 221,964 - 221,964 221,964 -
Investment
Corporation*
- 1,277,936 1,255,243 1,277,936 22,693
Textron Inc.* Textron Inc. common stock 353,304 - 353,304 353,304 -
- 121,348 84,526 121,348 36,822
Putnam* Putnam Voyager Fund 1,623,933 - 1,623,933 1,623,933 -
- 786 660 786 126
Putnam* The George Putnam Fund of Boston 1,335,800 - 1,335,800 1,335,800 -
- 7,315 7,123 7,315 192
Putnam* Pegasus Equity Index Fund 1,975,253 - 1,975,253 1,975,253 -
Putnam* Pegasus Money Market Fund 636,885 - 636,885 636,885 -
</TABLE>
There were no category (ii) or (iv) reportable transactions during 1998.
* Indicates a party-in-interest to the Plan.
<PAGE>12
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the
Registration Statement (Form S-8 No. 333-07121) pertaining
to the Employees' Retirement Savings Plan for the Precision
Stamping Division of Elco Textron Inc. of Textron Inc. of
our report dated May 5, 1999, with respect to the financial
statements and schedules of the Employees' Retirement
Savings Plan for the Precision Stamping Division of Elco
Textron Inc. included in this Annual Report (Form 11-K) for
the year ended December 31, 1998.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Providence, Rhode Island
June 28, 1999
