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Building and Growing
Textron Annual Report 2006

Table of contents

  • Page 1
    Textron Annual Report 2006 Building and Growing

  • Page 2

  • Page 3
    2006 was a strong year for Textron. We delivered superb financial performance while building our capacity for sustained growth. Our focus on transforming the enterprise continued. We ...

  • Page 4
    We're building on today's achievements ... We've focused on transforming Textron into a networked enterprise that shares talent and best practices among our powerful brands. 2

  • Page 5
    ... Energized by Innovation Since 2001, we have divested non-core manufacturing businesses representing more than $4.5 billion in annual revenues. The sale of Fastening Systems in August 2006 was a significant step forward with our value-enhancing strategy. Portfolio management will remain a focus as...

  • Page 6
    .... Cessna Segment Cessna delivered the first Citation Mustang in 2006, bringing jet ownership comfortably within reach of a new segment...grown to 35 percent since the popular Sovereign was introduced in 2003. Other 2006 milestones include the 500th XLS delivery and the 100th delivery of the Citation...

  • Page 7
    ... the U.S. and Europe in the future. Greenlee, building on 2006's success, expects to nearly double product introductions by applying TSS ...ecting on the enthusiastic reception to our products and valuable contracts won during 2006, I believe we all have reason to be optimistic about our prospects for...

  • Page 8
    Building Powerful Brands. Meeting Growing Demand. Textron is building worldwide recognition for our powerful brands and innovative products. Our multi-industry enterprise encompasses Bell, Cessna, Industrial and Finance business segments. The common language of Textron Six Sigma unites the 40,000 ...

  • Page 9
    The Citation X pierces the sky at 600 mph and remains the fastest commercial jet currently ï¬,ying. The X continues to be very popular, with 265 aircraft in service around the world and over 900,000 ï¬,ight hours logged since 1998. 7

  • Page 10
    ...Cessna leads the industry in new products, with 11 jets introduced in the last 10 years. Our research and development advantage continued in 2006 with the new Citation CJ4, which features customer-driven enhancements to performance, comfort and avionics. With entry into service planned for 2010, the...

  • Page 11
    ..., home to assembly operations for Cessna single engine piston aircraft. In 2006, the Independence facility conducted a Lean Accelerator, a rapid-improvement process ... by 50 percent and increased productivity by over 15 percent in 2006 for the areas in which the Lean Accelerator was deployed. These...

  • Page 12
    ... V-22 Osprey (pictured here and on the back cover) received international acclaim as it ï¬,ew daily at the Farnborough International Air Show in 2006. Sixteen of the revolutionary tiltrotor aircraft were delivered to the Department of Defense this year. We will deliver 14 V-22s for the U.S. Marine...

  • Page 13
    Bell: Engineering inventive products. Building customer loyalty. Bell Helicopter continues to build our legacy of customer service. In 2006, we ranked first in the annual Aviation International News survey and won our 13th consecutive number one spot in the Pro Pilot Magazine survey, reï¬,ecting ...

  • Page 14
    ...Greenlee Greenlee's global reputation as the premier partner to electrical and data communications professionals is built on a tradition of innovation. In 2006, we developed more than 30 professional grade products for sale in 2007. Input from electrical contractors ensures that our tools help them...

  • Page 15
    ...and allowing customers to operate their properties more efficiently. Kautex, pioneers in plastic fuel systems, booked record-high new orders in 2006. We introduced new products and patented technology to blow-mold fuel systems and components in one process. This innovation reduces production costs...

  • Page 16
    ..., driving revenue. Textron Financial scored 6 out of 7 in a customer service and loyalty study conducted by an independent third party in 2006. This result demonstrated that Textron Financial has built better customer satisfaction than even our largest industry competitors - by statistically signi...

  • Page 17
    ... in segment profit. We achieved this milestone by driving growth in core businesses and penetrating high-potential adjacent segments. Among notable 2006 advances, our Resort Finance Division furthered its expansion into Mexico, and Textron Financial Canada forged an exclusive agreement with Yamaha...

  • Page 18
    Board of Directors Lewis B. Campbell (1) Chairman, President and Chief Executive Officer Textron Inc. H. Jesse Arnelle (3,4) Senior Partner (Retired) Womble, Carlyle, Sandridge & Rice Kathleen M. Bader (2,3) Former President and Chief Executive Officer NatureWorks LLC R. Kerry Clark (2,4) ...

  • Page 19
    Management Committee Lewis B. Campbell Chairman, President and Chief Executive Officer Textron Inc. Kenneth C. Bohlen Executive Vice President and Chief Innovation Officer Textron Inc. John D. Butler Executive Vice President Administration and Chief Human Resources Officer Textron Inc. Ted R. ...

  • Page 20
    ... the end of the year, we typically adjust ending invested capital for significant events unrelated to our normal operations for the year. In 2006, we adjusted invested capital to eliminate the impact of the adoption of Statement of Financial Accounting Standards ("SFAS") No. 158, eliminate the net...

  • Page 21
    UNITED STATES 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, 2006 Commission File Number 1-5480 Textron Inc. (Exact name of registrant as specified...

  • Page 22
    ... of the consolidated financial statements on pages 72 through 74 of this Annual Report on Form 10-K. Bell Segment The Bell segment is comprised of Bell Helicopter...approximately 20%, 21% and 19% of our total revenues in 2006, 2005 and 2004, respectively. Bell Helicopter supplies advanced military ...

  • Page 23
    ...an upgrade of the Citation Encore, are scheduled to commence in 2007. The Citation Bravo has been discontinued with the last delivery in December 2006. The Cessna Caravan is the world's best selling utility turboprop. Caravans are offered in three models: the Grand Caravan, the Super Cargomaster and...

  • Page 24
    ... and, to a lesser extent, other industrial customers. Revenues of Kautex accounted for approximately 13%, 15% and 19% of our total revenues in 2006, 2005 and 2004, respectively. Kautex operates plants near its major customers all around the world. Kautex also is a leading supplier of windshield and...

  • Page 25
    ..., principally Bell helicopters and Cessna aircraft. Textron Financial Corporation also finances many of the sales at E-Z-GO and Jacobsen. In 2006, 2005 and 2004, Textron Financial Corporation paid Textron $1.0 billion, $0.8 billion and $0.9 billion, respectively, related to the sale of Textron...

  • Page 26
    ... regarding environmental matters is contained in Note 15 to the consolidated financial statements on page 68 of this Annual Report on Form 10-K. Employees At December 30, 2006, we had approximately 40,000 employees. Available Information We make available free of charge on our Internet website...

  • Page 27
    ... of our research and development investments to develop products is less than expected. We have customer concentration with the U.S. Government. During 2006, we derived approximately 19% of our revenues from sales to a variety of U.S. Government entities. Our ability to compete successfully for and...

  • Page 28
    ... and other labor issues. Approximately 18,000 of our employees are unionized, which represented approximately 45% of our employees at December 30, 2006. As a result, we may experience work stoppages, which could negatively impact our ability to manufacture our products on a timely basis, resulting...

  • Page 29
    Item 1A. Risk Factors If our Finance group is unable to maintain portfolio credit quality, our financial performance could be adversely affected. A key determinant of financial performance of our Finance group will be its ability to maintain the quality of loans, leases and other credit products...

  • Page 30
    ... by Textron's insurer. The settlement received final approval of the District Court on December 13, 2006, and the matter has been concluded. We are subject to actual and threatened legal proceedings arising ...holders during the last quarter of the period covered by this Annual Report on Form 10-K. 9

  • Page 31
    ... Stock Exchange. Our stock also is traded on the Chicago Stock Exchange. At December 30, 2006, there were approximately 16,000 holders of Textron common stock. The high and low common stock prices per share as reported on the New York Stock Exchange, and the dividends paid per share, in each case...

  • Page 32
    ...companies in the indices are weighted by market capitalization. $ 275 $ 250 $ 225 $ 200 $ 175 $ 150 $ 125 $ 100 $ 075 $ 050 $ 025 2001 2002 2003 2004 2005 2006 Textron Inc. S&P 500 Index Peer Group Index Dec. 31, 2001 Textron Inc. S&P 500 Peer group $ 100.00 $ 100.00 $ 100.00 Dec. 31, 2002 $ 106...

  • Page 33
    Item 6. Selected Financial Data (Dollars in millions, except per share amounts and where otherwise noted) 2006 $ 3,408 4,156 3,128 798 $ 11,490 $ 249 645 163 210 1,267 - - (202) (90) (269 706 5.53 5.43 1.55 21.03 98.38 75.76 93....

  • Page 34
    ...were evident across the enterprise. For example, at Bell Helicopter, our reinvigorated commercial line contributed to a 30% increase in commercial deliveries in 2006 and we are optimistic about continued helicopter growth, in large part, due to the market's enthusiasm for our recently introduced 429...

  • Page 35
    ..., $28 million in severance costs and $6 million in other associated costs. We have approximately $30 million in restructuring reserves remaining at the end of 2006 primarily related to contract termination costs for one lease in the Industrial segment which will be paid out over the next 13 years...

  • Page 36
    ...carrying value was required at that time. In the second quarter of 2006, we recorded an additional $120 million after-tax impairment charge to... benefit recorded upon the sale of InteSys. Segment Analysis Our four reportable segments are: Bell, Cessna, Industrial and Finance. These segments reï¬,ect...

  • Page 37
    ... military tiltrotor aircraft, the H-1 upgrade program and the ARH program. The V-22 program is in full-rate production and delivered 16 aircraft in 2006. The H-1 upgrade program is in the transition to production phase, and the ARH program is in the System Development and Demonstration ("SDD") phase...

  • Page 38
    ... costs in the fourth quarter. Accordingly, we recorded an additional $20 million charge related to the H-1 LRIP Lot 1 contract in the fourth quarter of 2006. In January 2007, the U.S. Government accepted two aircraft and we expect the remaining seven H-1 LRIP Lot 1 units to be accepted later in 2007...

  • Page 39
    ...profit Profit margin Backlog Demand in the business jet market continued to strengthen in 2006, which was reï¬,ected in a 34% increase in our backlog, despite a .... Over the past three years, Cessna has increased its annual production rate and has continued to focus on improving margins while...

  • Page 40
    ...us to focus on our core golf, resort, sport turf and municipal markets. Industrial Revenues Revenues in the Industrial segment increased $74 million in 2006, compared with 2005 primarily due to higher volume of $89 million, higher pricing of $46 million and a favorable foreign exchange impact of $10...

  • Page 41
    ..., partially offset by reductions in liquidating non-core portfolios. Finance Segment Profit Segment profit in the Finance segment increased $39 million in 2006, compared with 2005 due to an increase in net interest margin. The growth in average finance receivables generated $54 million of higher...

  • Page 42
    ...is transferred between the two borrowing groups, there is no cash transaction reported in the consolidated cash ï¬,ows at the time of the original fi... no less than $200 million. Operating Cash Flows of Continuing Operations (In millions) 2006 $ 1,119 338 (440) $ 1,017 $ 2005 894 247 (189) 952 ...

  • Page 43
    ..., sales and securitizations, of $301 million, $198 million and $744 million, respectively. The $380 million increase in cash used for the Manufacturing group in 2006 is largely due to the acquisition of two businesses in the Bell segment for $338 million in cash, along with an increase in capital...

  • Page 44
    ... a new 12 million-share repurchase program of which 4.4 million shares remained at December 30, 2006. Dividends On January 26, 2006, the Board of Directors authorized a $0.15 per share increase in our annualized common stock dividend to $1.55 per share. Dividend payments to shareholders totaled $244...

  • Page 45
    ...table summarizes the known contractual obligations of our Manufacturing group to make future payments or other consideration pursuant to certain contracts as of December 30, 2006, as well as an estimate of the timing in which these obligations are expected to be satisfied: Payment Due by Period (In...

  • Page 46
    ... in the preceding table, our cash and receipts are expected to be sufficient to cover maturing debt and other contractual liabilities. At December 30, 2006, our Finance group had $2.9 billion in debt and $426 million in other liabilities that are payable within the next 12 months. At December 30...

  • Page 47
    ...result from the indemnifying party's workshare under any subcontracts received. For 2006, AWB LLC's maximum obligation was 40% of the total contract value...purchaser for 50% of losses incurred on the portfolio above a 4% annual level. A liability of $14 million was originally recorded representing the...

  • Page 48
    ...We enter into a forward contract in our common stock on an annual basis. The contract is intended to hedge the earnings and cash ... the strike price and the prevailing common stock price. As of December 30, 2006, the contract was for approximately 1.5 million shares with a strike price of $77...

  • Page 49
    ...an asset might be impaired. We completed our annual impairment test in the fourth quarter of 2006 using the estimates from our long-term strategic plans... anticipate investments in capital expenditures at our Fluid Handling Products reporting unit to resolve current capacity issues as well as to ...

  • Page 50
    ... discount rate was 5.65% for 2006. A 50-basis-point decrease in this discount rate would result in a $29 million annual increase in pension expense for our ... are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities, applying enacted tax...

  • Page 51
    ...material impact on our financial position or results of operations. In July 2006, the FASB issued FASB Staff Position FAS 13-2, "Accounting for a Change...adoption, the estimated change in the projected cash ï¬,ows must be reported as an adjustment to retained earnings. The adoption of this Staff ...

  • Page 52
    ...a 10% decrease in the quoted market price of the marketable equity security. 2006 Sensitivity of Fair Value Fair to a 10% Value* Change 2005 Sensitivity of...) 10 10 (13) Forward-Looking Information Certain statements in this Annual Report on Form 10-K and other oral and written statements made by...

  • Page 53
    ... "Risk Factors" on pages 6 through 8 of this Annual Report on Form 10-K. Item 8. Financial Statements and Supplementary Data... three-year period ended December 30, 2006 Notes to the Consolidated Financial Statements Supplementary Information: Quarterly Data for 2006 and 2005 (Unaudited) Schedule II -...

  • Page 54
    ... and objectivity of the financial data presented in this Annual Report on Form 10-K. The consolidated financial statements have been... all material respects, effective internal control over financial reporting as of December 30, 2006. The independent registered public accounting firm, Ernst ...

  • Page 55
    ... on the COSO criteria. Also, in our opinion, Textron Inc. maintained, in all material respects, effective internal control over financial reporting as of December 30, 2006, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight...

  • Page 56
    ...of the Public Company Accounting Oversight Board (United States), the effectiveness of Textron Inc.'s internal control over financial reporting as of December 30, 2006, based on criteria established in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the...

  • Page 57
    Consolidated Statements of Operations For each of the years in the three-year period ended December 30, 2006 (In millions, except per share amounts) 2006 $ 10,692 798 11,490 8,528 1,523 438 26 - 10,515 975 (269) 706 (105) $ 601 $ $ 2005 9,415 628 10,043 7,464 1,403 290 29 ...

  • Page 58
    ... and December 31, 2005 (Dollars in millions, except share data) 2006 2005 Assets Manufacturing group Cash and cash equivalents Accounts receivable, net Inventories Other current assets Assets of discontinued operations Total current assets $ 733 964 2,069 ...

  • Page 59
    ...of the years in the three-year period ended December 30, 2006 Dollars (In millions) (In thousands) 2006 $2.08 Preferred stock 2005 105 (21) 84 50 (3) 47... (loss) income Comprehensive income * Shares issued at the end of 2006, 2005 and 2004 were as follows (In thousands): $2.08 Preferred ...

  • Page 60
    Consolidated Statements of Cash Flows For each of the years in the three-year period ended December 30, 2006 Consolidated (In millions) 2006 $ 601 105 706 - 290 26 - 30 37 (14) (427) 107 115 401 (324) 70 1,017 (48) 969 (11,225) 9,534 493 (502) 8 (431) 7 - 54 (2,062) ...

  • Page 61
    ... 8 (40) (3) (171) 2 (8) 524 - 16 973 1 974 - - - (5) 3 (238) 38 38 6 (158) (18) (176) 1 14 (360) 187 (415) (135) - - - (708) - (708) 29 119 451 $ 570 $ 2006 152 1 153 - 39 26 - - 38 - - 8 - 66 - 8 338 (13) 325 (12,240) 10,205 513 (164) - (12) - - 18 (1,680) - (1,680) 579 1,995 (1,121) - - - (80) 18...

  • Page 62
    ...inï¬,ow on our Manufacturing group's statement of cash ï¬,ows. Although cash is transferred between the two borrowing groups, there is no cash transaction reported in the consolidated cash ï¬,ows at the time of the original financing. These captive financing activities, along with all significant...

  • Page 63
    Notes to the Consolidated Financial Statements Leases - Certain qualifying noncancelable aircraft and other product lease contracts are accounted for as sales-type leases. Upon delivery, we record the present value of all payments (net of executory costs and any guaranteed residual values) under ...

  • Page 64
    ..., information regarding the market and industry trends for the investee's business, the investee's financial strength and specific prospects, and investment analyst reports, if available. If a decline in the fair value of an investment security is judged to be other than temporary, we write down...

  • Page 65
    ...cash ï¬,ows. Goodwill We evaluate the recoverability of goodwill annually or more frequently if events or changes in circumstances, such... are recorded in other comprehensive (loss) income, net of deferred taxes. We report changes in fair value of derivatives not qualifying as hedges in income. We do ...

  • Page 66
    ...material impact on our financial position or results of operations. In July 2006, the FASB issued FASB Staff Position FAS 13-2, "Accounting for a Change...adoption, the estimated change in the projected cash ï¬,ows must be reported as an adjustment to retained earnings. The adoption of this Staff ...

  • Page 67
    ... is recorded by the respective entity. General corporate overhead previously allocated to the businesses for reporting purposes is excluded from amounts reported as discontinued operations. In August 2006, we completed the sale of our Fastening Systems business to Platinum Equity, a private equity...

  • Page 68
    ... value of the net tangible and intangible assets acquired, with any excess recorded as goodwill. These estimates are preliminary as of the end of 2006 as we are awaiting the completion of the identification and valuation of intangible assets acquired. We expect these analyzes to be completed during...

  • Page 69
    ...over the useful lives of the assets. Amortization expense totaled $7 million in 2006, $4 million in 2005 and $6 million in 2004. Amortization expense is ...Note 4. Accounts Receivable Accounts receivable is composed of the following: December 30, 2006 $ 690 308 998 (34) $ 964 $ December 31, 2005 $ 660...

  • Page 70
    ...(5) 87 497 $ 2011 66 28 215 167 14 14 504 Thereafter $ 2 24 648 290 512 62 2006 $ 2,423 1,948 1,674 1,060 615 590 8,310 93 $ 8,217 2005 $ 1,654 1,633 1,... were $719 million and $222 million, respectively, at December 30, 2006 and $751 million and $164 million, respectively, at December 31, ...

  • Page 71
    ... Financial Statements The net investments in finance leases, excluding leases classified as installment contracts, and leveraged leases are provided below: (In millions) 2006 $ 517 267 784 (194) $ $ 590 546 329 875 (260) 615 (410) $ 205 $ $ $ $ 2005 457 241 698 (185) 513 520 311 831 (262) 569...

  • Page 72
    ...million in 2005 and $56 million in 2004. For securitizations in 2006, key economic assumptions used in measuring the retained interests at the date of securitization included a weighted-average life of three months, expected annual credit losses of 0.2% and a residual cash ï¬,ows discount rate of 10...

  • Page 73
    ... higher at those respective dates. Inventories related to long-term contracts, net of progress/milestone payments were $380 million at the end of 2006 and $350 million at the end of 2005. Bell Helicopter's H-1 program with the U.S. Government is currently transitioning to the production phase of the...

  • Page 74
    ...," we have not recorded a liability. Note 8. Debt and Credit Facilities Debt and credit facilities are composed of the following: December 30, 2006 December 31, 2005 (In millions) Manufacturing group: Short-term debt: Revolving lines of credit Current portion of long-term debt Total short-term...

  • Page 75
    ... coverage ratio (no less than 125%). The following table shows required payments during the next five years on debt outstanding at the end of 2006. The payment schedule excludes amounts that are payable under or supported by the primary revolving credit facilities or revolving lines of credit: (In...

  • Page 76
    ..., inventory purchases and overhead expenses. The fair value of these instruments at December 30, 2006 was a $13 million asset. At year-end 2006, $8 million in after-tax income was reported in accumulated other comprehensive loss from qualifying cash ï¬,ow hedges. This income generally is expected...

  • Page 77
    ...Reserved Shares of Common Stock At the end of 2006, common stock reserved for the subsequent conversion of ...fication due to sale of Fastening Systems, net of tax Reclassification adjustment, net of tax Balance at December 30, 2006 $ 47 97 - 144 (17) 127 - 45 (47) - $ 3 - (3 $ (132) (131)...

  • Page 78
    ...up to 25% of their base salary and up to 100% of annual and long-term incentive compensation and other compensation. Elective deferrals may be put...related to stock option exercises be presented as financing cash inï¬,ows. For 2006 and 2005, $31 million and $14 million, respectively, of these excess ...

  • Page 79
    ... forma net income Income per share: Basic - as reported Basic - pro forma Diluted - as reported Diluted - pro forma * Amounts are net of related... fair value of options granted per share was $25, $20 and $14 for 2006, 2005 and 2004, respectively. We estimate the fair value of options granted on the...

  • Page 80
    ...59.52 $ 52.05 $ 52.70 Options that were outstanding and exercisable as of December 30, 2006 are as follows: WeightedAverage Remaining Contractual Life (In years) Number of WeightedOptions Average (In thousands) ...not paid or accrued until vested, and is remeasured at each reporting period date. 59

  • Page 81
    ... employees. Our defined contribution plans cost approximately $50 million in 2006, $45 million in 2005 and $23 million in 2004. In...ned benefit postretirement plan in the year in which the changes occur and report these changes in comprehensive income. The measurement date provisions did not impact ...

  • Page 82
    ... the fair value of plan assets, along with our funded status are as follows: Pension Benefits (In millions) Postretirement Benefits Other Than Pensions 2006 $ 5,119 142 283 18 3 39 (288) 66 $ 5,382 $ 4,746 595 33 3 (288) 58 $ 5,147 $ (235) 2005 $ 4,931 129 271 16 3 97 (277) (51) $ 5,119 $ 4,537...

  • Page 83
    ... trend rates: Initial medical drug rate* Initial prescription drug rate* * For 2006, we estimate that the medical cost trend rate will decline to 5% for ...cost trend rates have a significant effect on the amounts reported for the postretirement benefits other than pensions. A onepercentage-point...

  • Page 84
    ...returns of the plans' assets and the advice of outside advisors. At December 30, 2006, the target allocation range is 44% to 70% for equity securities, 13% to... value of total pension plan assets by major category are as follows: December 30, 2006 59% 22% 10% 9% 100% December 31, 2005 58% 23% 9% 10...

  • Page 85
    ...$ $ 2005 574 165 739 $ $ 2004 333 207 540 United States Foreign Total Income tax expense for continuing operations is summarized as follows: (In millions) 2006 $ 152 8 43 203 $ 2005 128 17 26 171 64 (7) (5) 52 $ 223 $ $ 2004 49 2 59 110 59 9 (13) 55 165 Current: Federal State Foreign Deferred...

  • Page 86
    ...cant portions of our net deferred tax assets and liabilities were as follows: December 30, 2006 $ 16 115 97 190 57 - 79 330 21 147 1,052 (159) $ ...the earnings on which tax has not been provided had been distributed in 2006, our taxes, net of foreign tax credits, would have increased by approximately...

  • Page 87
    ... group for equipment leases with the subsidiaries of C&A. The outstanding balance on these leases totaled approximately $61 million at December 30, 2006. Based on uncertainties related to these leases, our Manufacturing group recorded a $10 million reserve to special charges in the fourth quarter...

  • Page 88
    ...compliance within 12 years of that date, or the next access. These crankshafts have not been the subject of a recall. As of December 30, 2006, reserves to cover costs for this program totaled $9 million. The Internal Revenue Service ("IRS") has challenged both the ability to accelerate the timing of...

  • Page 89
    ... 2008, $46 million for 2009, $39 million for 2010, $31 million for 2011 and a total of $202 million thereafter. Loan Commitments At December 30, 2006, our Finance group had unused commitments to fund new and existing customers under $1.3 billion of committed revolving lines of credit, compared with...

  • Page 90
    ...es the other related to any payments required under these agreements that result from the indemnifying party's workshare under any subcontracts received. For 2006, AWB LLC's maximum obligation was 40% of the total contract value, which equates to $464 million based on the current contract value of...

  • Page 91
    ...We enter into a forward contract in our common stock on an annual basis. The contract is intended to hedge the earnings and cash ... the strike price and the prevailing common stock price. As of December 30, 2006, the contract was for approximately 1.5 million shares with a strike price of $77...

  • Page 92
    ...in our warranty and product maintenance liability are as follows: (In millions) 2006 $ 318 189 (167) (25) 315 $ 2005 280 188 (...Flow and Other Information Supplemental Cash Flow Information We have made the following cash payments: (In millions) 2006 $ $ $ $ $ 111 341 173 2 (40) $ $ $ $ $ 2005 108...

  • Page 93
    ... of our Manufacturing group are composed of the following: (In millions) December 30, 2006 $ 663 315 276 107 39 - 558 December 31, 2005 $ 521 318 258...1,958 $ 1,749 Note 20. Segment and Geographic Data Our four reportable segments are: Bell, Cessna, Industrial and Finance. These segments reï¬,...

  • Page 94
    ..., net Interest expense, net Income from continuing operations before income taxes Revenues by product type within each segment are summarized below: Revenues (In millions) 2006 $ 2,347 1,061 4,156 1,542 696 517 373 798 $11,490 2005 $ 2,075 806 3,480 1,523 705 495 331 628 $10,043 2004 $ 1,615 639...

  • Page 95
    ... by geographic area: Revenues* (In millions) Property, Plant and Equipment, net** 2006 $ 7,006 2,099 462 631 636 656 $11,490 2005 $ 6,390 1,737... 323 533 617 443 $10,043 2004 $ 5,260 1,696 247 404 547 164 $ 8,318 2006 $ 1,381 259 75 21 65 6 $ 1,807 2005 $ 1,211 237 68 23 62 6 $ 1,607...

  • Page 96
    Textron Inc. Quarterly Data (Unaudited) 2006 Q4 Q3 Q2 Q1 Q4 Q3 2005 Q2 Q1 (Dollars in millions, except per share amounts) Revenues Bell Cessna Industrial Finance Total revenues Segment profit ...

  • Page 97
    ...adjustments ** These reserves exclude discontinued operations liabilities of $6 million in 2006, $18 million in 2005 and $22 million in 2004. ...(the "Act")) as of the end of the fiscal year covered by this report. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and...

  • Page 98
    ... of Shareholders to be held on April 25, 2007, is incorporated by reference into this Annual Report on Form 10-K. Information regarding our executive officers is contained in Part I of this Annual Report on Form 10-K. Item 11. Executive Compensation The information appearing under "Compensation of...

  • Page 99
    ... January 29, 1998. Incorporated by reference to Exhibit 3.1 to Textron's Annual Report on Form 10-K for the fiscal year ended January 3, 1998. By...Incorporated by reference to Exhibit 3.1 to Textron's Current Report on Form 8-K filed April 29, 2006. Indenture dated as of December 9, 1999, between ...

  • Page 100
    ...Incorporated by reference to Exhibit 10.1 to Textron's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006. Supplemental Retirement Plan for Textron Key Executives. Incorporated by reference to Exhibit 10.4 to Textron's Annual Report on Form 10-K for the fiscal year ended...

  • Page 101
    ...-Employee Directors. Incorporated by reference to Exhibit 10.1 to Textron's Annual Report on Form 10K for the fiscal year ended December 28, 2002. Amended and ...4, 2006. Incorporated by reference to Exhibit 10.3 to Textron's Quarterly Report on Form 10-Q for the fiscal quarter ended April 1, 2006. ...

  • Page 102
    ... on Form 8-K filed May 1, 2006. Master Services Agreement between Textron Inc. and Computer Sciences Corporation dated October 27, 2004. Confidential treatment has been requested for portions of this agreement. Incorporated by reference to Exhibit 10.26 to Textron's Annual Report on Form 10-K for...

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    ... Section 1350. 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 21st day of February 2007. TEXTRON INC...

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    Textron Inc. Pursuant to the requirements of the Securities and Exchange Act of 1934, this Annual Report on Form 10-K has been signed below on this 21st day of February 2007, by the following persons on behalf of the registrant and in ...

  • Page 105
    Notes 2006

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    Notes 2006

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    Textron Inc. 40 Westminster Street Providence, RI 02903 (401) 421-2800 www.textron.com