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1
Douglas R. Wilburne Vice President, Investor Relations
Merrill Lynch 9th Annual Global Industries
May 9, 2007
Building and Growing
2
Forward-Looking Information
Certain statements in today’s discussion will be forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or project revenues, income, returns or other financial measures. These forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements.
These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materiallyfrom those contained in the statements, including the risks and uncertainties set forth under our full disclosure located at theend of this presentation.
3
2006 Outstanding YearTransformation Strategy Readily ApparentTransformation Strategy Readily Apparent
• Revenue up 15%, organically
• Segment profit up 10.6%
• EPS from continuing operations up 44%
• ROIC: 16.8% -
– Up 360 basis points vs. 2005
– 730 bps > WACC
• Record Aircraft Backlog:
$11.6B
+ $0.8B Bell 429
+ $0.5B CitationShares
4
Q1 2007 Outstanding Quarter
Transformation Momentum ContinuesTransformation Momentum Continues
• Revenue up 12.6%
• Segment profit up 26.1%
• Manufacturing margins up 150 bps
• EPS from continuing operations up 30%
• Record Aircraft Backlog:
$12.9B
+ $0.8B Bell 429
+ $0.5B CitationShares
5
Transforming Textron Our Ongoing Journey to Premier
A Simpler, More Focused Portfolio of Leading, Branded Businesses in
Attractive Industries
A Simpler, More Focused Portfolio of Leading, Branded Businesses in
Attractive Industries
NETWORKED ENTERPRISE
EnterpriseManagementEnterprise
ManagementHow We Manage
What We Own
PortfolioManagement
PortfolioManagement
WhatWe Own
VISION:To be the premier multi-industry company, recognized for
our network of powerful brands, world-class enterprise processes and talented people
VISION:To be the premier multi-industry company, recognized for
our network of powerful brands, world-class enterprise processes and talented people
6
Textron Financial
Cessna
2006 Revenue: $11.5 Billion2006 Revenue: $11.5 Billion2010 Revenue: $15 2010 Revenue: $15 -- $17 Billion$17 Billion
CessnaCessna
36%
IndustrialIndustrial
E-Z-GO
Fluid & Power
Greenlee
Jacobsen
Kautex
27%
FinanceFinance7%
BellBell
Bell Helicopter
Textron Systems
30%
Textron –Leading Branded Businesses &Attractive Growth Markets
8
Spares
Overhaul & Repair
Technical Data
Support Equipment
Field Services
Training Systems
Depot Maintenance
Bell Helicopter$2.3 Billion in Revenues (’06)
Aircraft~ $850 Million
V-22 - Osprey
AH-1Z – Super Cobra
UH-1Y - Yankee
OH-58D - Kiowa
TH-67 – Trainer
ARH – Armed Recon
Eagle Eye - UAV
206
210
407
412
427
430
Support~ $380 Million
Spares
Huey II
Accessories/Completions
Repair & Overhaul
Rotor Blade Repair
Training Academy
Technical Support
U.S. MilitaryU.S. Military
Installed Base: 2,440 Installed Base: 10,280
Aircraft~ $550 Million
Support~ $560 Million
CommercialCommercial
52%
48%
52%
48%
Balanced Business ... Complementing Each Other
9
Aircraft
609
412407
206B3/L4
429427
430
210
Support
SparesRepair &OverhaulAircraft CompletionsRefurbishmentTraining SystemsField ServicesTechnical DataSupport Equipment
Commercial Business
Commercial Business Growing
Installed Base: 10,280
10
New Introduction from Bell
• “First-ever” Technologies from Bell’s Modular Affordable Product Line (MAPL)
– Unprecedented Cabin and Cockpit Features
– New High Performance Rotor Technology
• First Delivery – 2008/2009
Bell 429 Global Ranger Light Twin
Over 185 Orders
11
30
55
80
105
130
155
180
2002 2003 2004 2005 2006 2007
Commercial Business Growing
Commercial DeliveriesCommercial Deliveries
159
~180
123
111
92
105
12
Rotorcraft Industry -Strong Growth Outlook
Global War On Terrorism • DOD Rotorcraft Spend Increasing From 4.8% To 6.4% Of Procurement
Budget: FY05 To FY11
• Flight Hours Have Increased 2-4x Previous Levels
• Rotorcraft Survivability Essential To DOD
Homeland SecurityIncreasing Border Protection: Domestic And International
Offshore/Utility Segments80% Of Fleet: 20 Years Or Older
Regulatory/Insurance/Safety Issues Driving Fleet Replacement
High Oil Prices Driving Offshore Exploration
EMS & National Disaster EffortsAsia Tsunami Disaster; Pakistan Earthquake Relief
Hurricane Katrina / Rita / Wilma
Growing International DemandAsia-Pacific Significant Opportunity
Industry Growth Continues Across the Board
13
Aircraft Support
SparesOverhaul & RepairTechnical DataSupport EquipmentField ServicesTraining SystemsDepot Maintenance
Installed Base: 2,440
V-22Osprey
AH-1Z/ UH-1YSuperCobra/Huey
OH-58DKiowa Warrior
TH-67Creek II
USCGEagle Eye
VH-71Marine One
Government Business
ARH-70ABell 407
USAFCSAR-X Potential
Government Business Growing
14
V-22 Program
360 AircraftCombat AssaultAssault SupportExternal Load
Operations
Marine Corps
50 AircraftSpecial Operations
Insertion/ExtractionWMD Warfare
Air Force
48 AircraftCombat SAR
Fleet LogisticsSpecial WarfareAerial Tanker
Navy
$19BProgram
Twice the Speed . . . Five Times the Range
Total program: 458 unitsTotal program: 458 unitsAdditional future demandAdditional future demand
15
UH-1Y100 Units
AH-1Z180 Units
H-1 Upgrade ProgramLow Cost/High Performance
• Delivered first 3 Aircraft Q1 2007
• Improving line productivity
• Operational evaluation, phase II
• Resolve helmet issue
• Achieve full-rate decision
$5.6BProgram
Critically important to customer
16
• Militarized Commercial Derivative Of 407• 368 Units + 144 in President’s Budget Proposal• Initial Delivery – Under Review• Significant Future Foreign Military Potential
Armed Reconnaissance Helicopter
Completed Critical Design ReviewCompleted Critical Design Review
17
13%36% 13%
Textron Systems2006 Revenues: $1.1 Billion
Product Performance Driving GrowthProduct Performance Driving Growth
Intelligent Battlefield Sys
Air Launched Weapons
Aircraft Products
Aircraft Engines
Precision Engagement
38%
Combat Vehicles
Marine Systems
Marine & Land
18
Armed Vehicles – High Growth Opportunity
• U.S. Army Armed Security Vehicle requirement:
– Total Program of Record: 2,850
– Current contract: 1,350
• Additional requirements:
– Air Force: 95
– Army Convoy Protection: 700
– Army Knight: 381
– MRAP?
– Foreign Military?
– Aftermarket Support?
• Current ’07 production plan: ~530
19
CaravanSingle EngineCitations 6%
15%
3%
Used Aircraft
Parts, Service& Other
3%6% CitationShares
67%
Continued Growth Expected
Cessna2006 Revenues: $4.2 Billion
20
Corporate Profits A Key Driver of Jet Demand
$B Units
Source: Global Insight, Cessna estimates
0
200
400
600
800
1,000
1,200
1,400
1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 20080
200
400
600
800
1,000
1,200
1,400Real Corporate Profits (8 Q Shift)
Jet Shipments
21
New Products Drive GrowthCertified in 2004 - 2006
Citation CJ3$6.7M
Backlog: ~$950M
Citation CJ2+$5.7M
Backlog: ~$525M
Citation CJ1+$4.2M
Backlog: ~$230M
Citation Mustang$2.5M
Backlog: ~$750M
Citation XLS$11.6M
Backlog: ~$2.2B
Citation Sovereign$15.5M
Backlog: ~$2.1B Backlog: ~$150M
Citation Encore+$8.1M
22
Citation CJ4
• Fully integrated Collins Pro Line 21 avionics
• Advanced avionics diagnostic system
• New standard integrated cabin management system
• Newly engineered, moderately swept wing
• New Williams International FJ44-4A electronically controlled (FADEC) engines
• Over 120 orders as of Q1 2007
Upward Extension to the Single-pilot-certified Citation Family
$7.995 million
First Flight: 1H08
Deliveries: 1H10
23
Growth Drivers – Cessna• International Markets Expanding
• Current Demand:– 496 Orders in 2006
– 122 Orders in Q1 2007
– Sold out for 375 deliveries in ’07
– >400 orders for ’08 delivery
– $9.0B backlog + $0.5B CitationShares
– Order activity remains strong
48%
’06
41%35%35%19%
International Citation Orders’05 ’04’03’02
24
Aftermarket Services
10.4% CAGR10.4% CAGR
$0
$100
$200
$300
$400
$500
$600
$700
Reven
ues
(in
mil
lion
s)
1999 2000 2001 2002 2003 2004 2005 2006
25
Value Drivers – Cessna Segment•Leveraging demand through operational
excellence
•Productivity strides
•Lean (e.g. combined CJ production line)
Combined CJ1+, CJ2+ and CJ3 Production Line
26
15.5%
8.4%
10.7%
13.1%
9.3%
10.5%11.1%
11.8%
7%8%9%
10%11%12%13%14%15%16%
'99 '00 '01 '02 '03 '04 '05 '06 '07E
NO
P M
argi
n
150
200
250
300
350
400
Unit D
eliveries
Jet Deliveries
49%33%17%13%23%22%19%14%ROIC 49%33%17%13%23%22%19%14%ROIC
~16%
Cessna Jet Deliveries and MarginsLeveraging Top Line Growth
~50%
27
Industrial
Revenues (Revenues (’’06)06)$3.1 Billion$3.1 Billion
E-Z-GO~$395 million
Fluid & Power~$520 million
Greenlee~$375 million
Jacobsen~$300 million
Kautex~$1.5 billion
Low-Mid Single Digit Organic GrowthContinual Margin Improvement
28
Value Drivers - Industrial Segment
• Steady operational improvements across the segment
• Lean implementation continuing
• Good growth; China expansion
• Significant new product introductions
29
Liquidating
Textron Financial Corporation2006 Managed Finance Receivables: $10.2B
Asset-BasedLending
8%
DistributionFinance
AviationFinance
Golf Finance
ResortFinance
StructuredCapital
19% 15%
13% 7%Non-Core1%
Growing ~10%/Year
37%
(% of Managed Finance Receivables as of 12/31/06)
30
Textron Financial Corporation
• Strategic to aircraft, golf & turf
• Excellent core business
– Good growth
– Strength in underwriting
• Leveraging assets and capabilities
31
Textron - Strong Organic GrowthInvesting in ER&D and CAPEX to SupportAbove-Average Growth
2005 - 2009 Investments -• Engineering,
Research & Development:
$2.2 Billion
• CAPEX: $2.0 Billion
Creating Value
32
$11.0
$13.0
$15.0
$17.0
2006 2007 2008 2009 2010
Strong Organic GrowthInvesting in ER&D and CAPEX to SupportAbove-Average Growth
10% CAGR – Optimistic
7% CAGR – Probable
$, Billions
33
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2001 2002 2003 2004 2005 2006 2007 2008 2009(15.00)
5.00
25.00
45.00
65.00
85.00
105.00
13.2%
8.8%
10.6%9.6%9.0%
Peer Group First Quartile
Textron ROIC & Share Price
Improved Returns Driving Share Price
Peer Group Mean (14.7%)
16.8%
ROIC Share Price+$100
34
Textron Transformation Strategy Driving & Leveraging Growth
•Strong organic growth
•Double digit earnings growth
•Expanding ROIC
•Premier growth of shareholder value
EliminateWaste
ReduceVariability
Grow & Innovate
35
Forward Looking InformationForward-looking Information: Certain statements in this report and other oral and written statements made by Textron from time to time are forward-looking statements, including those that discuss strategies, goals, outlook or other non-historical matters; or project revenues, income, returns or other financial measures. These forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including the following: [a] changes in worldwide economic and political conditions that impact demand for our products, interest rates and foreign exchange rates; [b] the interruption of production at Textron facilities or Textron’s customers or suppliers; [c] Textron's ability to perform as anticipated and to control costs under contracts with the U.S. Government; [d] the U.S. Government's ability to unilaterally modify or terminate its contracts with Textron for the Government's convenience or for Textron's failure to perform, to change applicable procurement and accounting policies, and, under certain circumstances, to suspend or debar Textron as a contractor eligible to receive future contract awards; [e] changes in national or international funding priorities and government policies on the export and import of military and commercial products; [f] the ability to control costs and successful implementation of various cost reduction programs; [g] the timing of new product launches and certifications of new aircraft products; [h] the occurrence of slowdowns or downturns in customer markets in which Textron products are sold or supplied or where Textron Financial offers financing; [i] changes in aircraft delivery schedules or cancellation of orders; [j] the impact of changes in tax legislation; [k] the extent to which Textron is able to pass raw material price increases through to customers or offset such price increases by reducing other costs; [l] Textron’s ability to offset, through cost reductions, pricing pressure brought by original equipment manufacturer customers; [m] Textron's ability to realize full value of receivables; [n] the availability and cost of insurance; [o] increases in pension expenses and other post-retirement employee costs; [p] Textron Financial’s ability to maintain portfolio credit quality; [q] Textron Financial’s access to debt financing at competitive rates; [r] uncertainty in estimating contingent liabilities and establishing reserves to address such contingencies; [s] performance of acquisitions; [t] the efficacy of research and development investments to develop new products; [u] the launching of significant new products or programs which could result in unanticipated expenses; and [v] bankruptcy or other financial problems at major suppliers or customers that could cause disruptions in Textron’s supply chain or difficulty in collecting amounts owed by such customers.