| TEXTRON INC. | |||||
| Non-GAAP Financial Measures | |||||
| (Dollars in millions, except per share amounts) | |||||
| We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures. These non-GAAP financial measures exclude certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures may be useful for period-over-period comparisons of underlying business trends and our ongoing business performance, however, they should be used in conjunction with GAAP measures. Our non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define similarly named measures differently. We encourage investors to review our financial statements and publicly-filed reports in the entirety and not to rely on any single financial measure. We utilize the following definitions for the non-GAAP financial measures included in this release: | |||||
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Adjusted income from continuing operations and adjusted diluted earnings per share |
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| Adjusted income from continuing operations and adjusted diluted earnings per share both exclude Special charges, net of income taxes. We consider items recorded in this line item such as enterprise-wide restructuring and acquisition-related restructuring, integration and transaction costs, to be of a non-recurring nature that is not indicative of ongoing operations. | |||||
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Manufacturing cash flow before pension contributions |
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| Manufacturing cash flow before pension contributions adjusts net cash from operating activities of continuing operations (GAAP) for the following: | |||||
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• Deducts capital expenditures and includes proceeds from the sale of property, plant and equipment to arrive at the net capital investment required to support ongoing manufacturing operations; |
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• Excludes dividends received from Textron Financial Corporation (TFC) and capital contributions to TFC provided under the Support Agreement and debt agreements as these cash flows are not representative of manufacturing operations; |
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• Adds back pension contributions as we consider our pension obligations to be debt-like liabilities. Additionally, these contributions can fluctuate significantly from period to period and we believe that they are not representative of cash used by our manufacturing operations during the period. |
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| While we believe this measure provides a focus on cash generated from manufacturing operations, before pension contributions, and may be used as an additional relevant measure of liquidity, it does not necessarily provide the amount available for discretionary expenditures since we have certain non-discretionary obligations that are not deducted from the measure. | |||||
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| Income from Continuing Operations and Diluted Earnings Per Share (EPS) GAAP to Non-GAAP Reconciliation: | |||||||||||
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Three Months Ended
April 1, 2017 |
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| Diluted EPS | |||||||||||
| Income from continuing operations - GAAP | $ | 100 | $ | 0.37 | |||||||
| Restructuring, net of taxes of $5 million | 10 | 0.04 | |||||||||
| Arctic Cat restructuring and transaction costs, net of taxes of $7 million | 15 | 0.05 | |||||||||
| Total Special charges, net of income taxes | 25 | 0.09 | |||||||||
| Adjusted income from continuing operations - Non-GAAP | $ | 125 | $ | 0.46 | |||||||
| Manufacturing Cash Flow Before Pension Contributions GAAP to Non-GAAP Reconciliation and Outlook: | |||||||||||
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Three Months Ended |
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| March 31, 2018 | April 1, 2017 | ||||||||||
| Net cash from operating activities of continuing operations - GAAP (a) | $ | (53 | ) | $ | (165 | ) | |||||
| Less: | Capital Expenditures | (77 | ) | (76 | ) | ||||||
| Dividends received from TFC | (50 | ) | - | ||||||||
| Plus: | Total pension contributions | 13 | 14 | ||||||||
| Proceeds from the sale of property, plant and equipment | 9 | - | |||||||||
| Manufacturing cash flow before pension contributions - Non-GAAP (a) | $ | (158 | ) | $ | (227 | ) | |||||
| 2018 Outlook | |||||||||||
| Net cash from operating activities of continuing operations - GAAP | $1,211 - $ 1,311 | ||||||||||
| Less: | Capital Expenditures | (525) | |||||||||
| Dividends received from TFC | (50) | ||||||||||
| Plus: | Total pension contributions | 55 | |||||||||
| Proceeds from the sale of property, plant and equipment | 9 | ||||||||||
| Manufacturing cash flow before pension contributions - Non-GAAP | $700 - $ 800 | ||||||||||
